High QualityTimeshare Resale Prices Plummeting

[tombo]

Steve, ROFR may certainly eliminate some buyers who are only willing to offer a low price but reducing the number of lowball offers isnt a disadvantage if the seller wants a certain price.

On the other hand how about a buyer who wants to own DVC. If you want to buy resale you absolutely know that you cannot buy a contract for less than lets say $85 per point. So what is the buyer to do. Either offer over $85 per point or the sale wont go through. Price protection for DVC owners.

My point is that while not everyone is a fan of ROFR, it can and does keep up resale prices for some high demand timeshares.

If you are a seller and you want to sell your Marriott or DVC, having a reduced number of offers is a HUGE disadvantage. People who don't need to sell don't have to accept a low offer whether there is ROFR or not. People who need to sell want to get every offer they can. ROFR reduces the number of buyers willing to make an offer (I will never make an offer on an ROFR resort again). How many owners might take $6000 for their week but will never get an offer because some buyers feel like $6000 won't pass ROFR. This poor seller has buyers that would pay a price he would take if not for ROFR. That makes it harder to sell the week and so he reduces the asking price to $5000 after having it for sale for months with no offers. It doesn't matter whether it is ROFR'd or not, it sold for $5000 instead of $6000 thanks to ROFR limiting the pool of buyers which ultimatelly lowered the final sale price.

Many DVC and Marriott timeshare owners assume that buyers have to have DVC or Marriott and will pay any price to get them. The current sale prices prove that theory wrong. The fact that so many weeks are for sale for months on redweek etc shows that these weeks won't sell at anywhere near the prices they commanded in the past. Ebay Marriott weeks are selling for half the price they brought 6 months ago, but they still aren't cheap enough to make Marriott want to ROFR them. Supply and demand in action with no regard to ROFR.

ROFR doesn't keep prices high on high demand timeshares. High demand and high quality keeps the prices high. ROFR keeps the cheap supply of inventory available for the developer to access if they want it. The weeks sell for whatever the buyer offered, the only thing ROFR changes is who the final owner is.

If I buy a week, pay MF's on the week, and want to sell my week for $1000 to a neighbor or friend, I should be able to sell it to whoever I want for whatever I want because I own it. If I spend my money and time advertising my week for sale I should be able to sell it to the buyer that finally made me an acceptable offer on my week. The owner is on their own to try and find a buyer. That is something that ROFR developers won't do, make an offer to buy your week. They simply wait until all the negotiating is done and then decide at their leisure if they can make money or not by ROFR'ing at the previously agreed upon price. If it is good for the developer they ROFR it. If it isn't something the developer wants, it is sold to the original buyer. Either way it is sold for the original price, not one penny more. I personally will never buy a week at a resort that has ROFR again, and I love Marriott resorts.

 

[Transit]

My personal ROFR experience went like this. I was tring to purchase a Hyatt week in Key West watched several ebay auctions from different sellers and saw the same weeks ending price between 8000-8400 I was convinced these auctions were being price fixed by inside biding.When a new unit listed I decided to Email the owner and lowball offer $6000 off the bat.The owner emailed me back and stated that that wouldn't pass Hyatt ROFR which was 8000 for that unit.I watch the auction end and it ended at 8400.I watched a few more all in the same price range.To me it showed that the ROFR was creating a set floor price for that unit.Recently when Hyatt decided to selectively exercise ROFR the price for those units dropped by $2000.I'm not saying that ROFR is good or bad but from what I see the asking prices for resales with ROFR remained consistantly higher than without.

 

[tombo]

My personal ROFR experience went like this. I was tring to purchase a Hyatt week in Key West watched several ebay auctions from different sellers and saw the same weeks ending price between 8000-8400 I was convinced these auctions were being price fixed by inside biding.When a new unit listed I decided to Email the owner and lowball offer $6000 off the bat.The owner emailed me back and stated that that wouldn't pass Hyatt ROFR which was 8000 for that unit.I watch the auction end and it ended at 8400.I watched a few more all in the same price range.To me it showed that the ROFR was creating a set floor price for that unit.Recently when Hyatt decided to selectively exercise ROFR the price for those units dropped by $2000.I'm not saying that ROFR is good or bad but from what I see the asking prices for resales with ROFR remained consistantly higher than without.

Did you consider that the current market value for those weeks at that time was about $8000 whether there was ROFR in effect or not? You have no idea if they were ROFR'ing back then at any particular price, or even if they were activelly ROFR'ing at all. One of those weeks could have sold for $6000 and not been ROFR'd. A week could have sold for $8500 and been stolen by the developer. None of the resorts announce when or if they are ROFR'ing or at what price. The seller couldn't know at what price or even if it would have been ROFR'd since it is done by the developer on a case by case basis. The seller was trying to get more for their week using the threat of ROFR just like saying that they had 2 other serious buyers making offers higher than yours. It is a sales bluff. All anyone could know for sure is the ending e-bay price.

To assume that the lower prices are due to less ROFR'ing is a big assumption that I doubt is correct. How could any buyer know that the resort is ROFR'ing less or at lower prices when the resorts refuse to discuss it. Are those same sellers now announcing to buyers that the resorts are ROFR'ing at lower prices or not at all? It wouldn't make sense to announce that big secret to buyers if it would lower sale prices. How are all of these e-bay shoppers finding out that they should lower their bids since there is no more ROFR's occuring?

I can name several resorts that don't have ROFR that consistently sold in the $8,000 plus range on e-bay 6 months ago. Those same resorts are selling for $4000 or less now. Could the difference possibly be the bad economy? The decline would have been attributed to lack of exercising ROFR if these were ROFR resorts. All timeshare prices are down now. The surprising lack of ROFR'ing by resorts at these low prices should simply show you that the developers don't feel like these weeks are worth buying in this economy even at these low prices.

When prices are high at an ROFR resort, it is all thanks to ROFR. When prices fall at an ROFR resort the first thing you hear from owners is that the resort must have stopped exercising ROFR. The fact is that the sales prices are determined by the offers buyers make to sellers, and ROFR doesn't do anything to change that.

 

[Transit]

I do not have the sales data but in that sale the owner stated he was basing the price on what he thought the ROFR floor price was. I'm suggesting that there could be validity in the argument that ROFR set a floor price and kept resale prices at a higher level.Unless a in depth report with data on this subject is done I don't think it can be disregarded as just falsehood that ROFR has held prices higher.I understand the points you guys make about how ROFR can work against sellers & buyers and how the developer wins but in all these posts about ROFR I haven't found a truely convincing argument that it didn't keep prices higher.

 

[vacationtime1]

Marriott's Desert Springs I, Desert Springs II, and Shadow Ridge are fairly similar developments within a few miles of each other. DS-I does not have ROFR; DS-II and SR both have it.

I have been tracking platinum season prices on eBay over the past few months as I plan to purchase a platinum season unit for Marriott-preferenced I.I. exchanges (note: their platinum seasons are similar or identical).

Typical eBay closing prices are down sharply at all three developments -- from about $10,000 - $11,000 a few months back to $7,500 - $8,000 today. DS-I formerly sold for a few hundred more than the others; that price spread has diminished, if anything.

In this narrow example, the existence and exercise (or non-exercise) of ROFR has made no difference at all. The price decline at all three developments has been comparable and results from the same market forces, not from ROFR.

Obviously, this is a limited sample, but it is the only example of which I am aware where the same developer has comparable properties in the same location, one with ROFR, one without.

 

[MaryH]

My personal ROFR experience went like this. I was tring to purchase a Hyatt week in Key West watched several ebay auctions from different sellers and saw the same weeks ending price between 8000-8400 I was convinced these auctions were being price fixed by inside biding.When a new unit listed I decided to Email the owner and lowball offer $6000 off the bat.The owner emailed me back and stated that that wouldn't pass Hyatt ROFR which was 8000 for that unit.I watch the auction end and it ended at 8400.I watched a few more all in the same price range.To me it showed that the ROFR was creating a set floor price for that unit.Recently when Hyatt decided to selectively exercise ROFR the price for those units dropped by $2000.I'm not saying that ROFR is good or bad but from what I see the asking prices for resales with ROFR remained consistantly higher than without.

Transit, how many points was that Hyatt contract? 1400?

 

[Vacation Dude]

All this ROFR vs non-ROFR analysis seems pointless to me.

Most people are only interested in buying a particular brand at a particular location (regardless of ROFR) and I assume most people are 1-2 week owners maximum and are not timeshare junkies with 8-10 weeks like some of you are.

I personally think the number of people that refuse to buy a property solely based on ROFR is very tiny.

I personally don't care either way as long as the property is nice and a good value.

 

[gorevs9]

If a TS owner gives away a unit, can the resort exercise the ROFR and take the unit for nothing?

 

[tombo]

If a TS owner gives away a unit, can the resort exercise the ROFR and take the unit for nothing?

You have to find a person willing to take the unit for nothing, then they will ROFR the week only if they want it. If you don't have a person willing to take the week for free you can't call the resort and give it back to them (in most cases). You also can't call a resort and tell them you will let them have your week for $1000 (example) because they will inform you that they don't buy weeks. If they did buy weeks at a set price, that would actually set a floor price on units. Instead you must have a buyer and price already agreed upon before the developer will let you know if they want to buy the week or not.

 

[tombo]

I do not have the sales data but in that sale the owner stated he was basing the price on what he thought the ROFR floor price was. I'm suggesting that there could be validity in the argument that ROFR set a floor price and kept resale prices at a higher level.

Current sale prices prove that there is no set floor price established by the developer by using ROFR or by any other means. From the limited data we have on ROFR from TUG buyers who list their experiences here or on Dioxide's report, Marriott will ROFR a week at $8000, then they let 3 identical sales pass ROFR at $5000. Setting a floor price at $8000 would mean that none of the weeks that sold for less than $8000 would pass ROFR. In fact to actually set a floor price would mean that the weeks that sold for $5000 would be raised to $8000 by Marriott guaranteeing that the seller received the full $8000 that was the "floor price". It it sells for $5000 whether it is ROFR'd or not, that is all the seller gets, and $5000 is the new floor price. If someone sells their week for a dollar, that is the new "floor price". To claim that the floor price is $8000 when it often sells for less is wrong. Many here however point to the $8000 week that was ROFR'd as the floor price and the numerous identical weeks that passed at $5000 as some that slipped through the cracks or that sold cheap because Marriott wasn't ROFR'ing. The simple irrefutable fact is that several weeks sold for $5000 and several sold for $8000. Whether they were stolen by Marriott or not, those were the sale prices, and many sellers received thousands less than the imaginary $8000 floor price.

If Marriott was to declare that Plat weeks at xxyz resort would be purchased by Marriott for $5000 (for example), then that would actually be setting a floor price. No one would ever sell their week for less than $5000 dollars. The current situation without a floor price leaves buyers listing their weeks for sale for months with over $1000 in 2009 MF's staring them in the face and no offers from any buyers (including Marriott). When a buyer finally makes an offer the seller is not holding out for that higher price that ROFR will magically bring. They will jump on a real offer even if it is way lower than they had originally wanted. The weeks sell for whatever the market price is. All that is happening is the resort gets to decide if they want to ROFR the week at the price it has already sold for or not. Nothing in this equation has Marriott offering to raise the sale price one cent. The final sale price was determined as it always is, by a seller and a buyer, with ROFR having nothing to do with it.

 

[Transit]

Transit, how many points was that Hyatt contract? 1400?

Yes ,1400 silver season

All this ROFR vs non-ROFR analysis seems pointless to me.

This debate has been ongoing here on tug for quite some time.

 

[Transit]

Many desirable high quality resort timeshare weeks are being purchased for pennies on the dollar.

Prices are 10% to 20% of what original purchasers paid 5 to 10 years ago. 10K weeks for 1K, 5K weeks for $500.00.

Orlando resorts are going for $100.00 and less on Ebay.

It is truly a buyers market for many high quality resorts.

Appears 2009 will see many owners almost giving away nice timeshare weeks.

Putting aside the ROFR debate and looking into the original post."A true buyers market for high quality resorts." Yes prices are way down across the board and continue to drop but which weeks to choose and at what resorts? What resorts will come out of this economic disaster intact and still a vacation value? .Can those with too many blue weeks survive? Will developers do anything to keep resorts from flowing into the abyss of complete worthlessness ? What may seem like a good bargan now at some high quality resorts may not be if the spiral keeps continuing downward .

 

[AwayWeGo]

Forget R. O. F. R. -- What About The H. O. A. - B. O. D. ?

Putting aside the ROFR debate and looking into the original post."A true buyers market for high quality resorts." Yes prices are way down across the board and continue to drop but which weeks to choose and at what resorts? What resorts will come out of this economic disaster intact and still a vacation value? .Can those with too many blue weeks survive? Will developers do anything to keep resorts from flowing into the abyss of complete worthlessness ? What may seem like a good bargan now at some high quality resorts may not be if the spiral keeps continuing downward .

Owners at timeshares managed by independent, owner-controlled HOA-BODs can count themselves fortunate that the issue of sustained resort quality & improvement does not hinge on the health or vigor of the timeshare company's bottom line.

Sure, the independent owner-controlled HOA-BODs will face challenges in assuring that their timeshares escape spiraling down into abysses. But in meeting those challenges, the independent boards look only to preserving & enhancing the quality & value of the resort for the benefit of their fellow owners, free of any concerns over whether the timeshare company's sales staff makes quota, or even whether the timeshare company stays in business.

By me, the issue of timeshare HOA-BOD independence & competence is lots more important than ROFR or no-ROFR -- high-end resorts & mid-grade resorts & lesser resorts mox nix.

I'm guessing that full-freight timeshare buyers always get units at resorts where company-controlled HOA-BODs are in charge. That's because it's impossible to get the timeshare company to bow out until resort inventory is sold out -- & difficult to vote the company out even then.

Full Disclosure: Management at both our Orlando FL timeshares is out from under timeshare company control. Independent, owner-controlled HOA-BODs were already calling the shots when we bought. Who knew? Not us. We had no idea -- wouldn't even have known what difference it makes if we hadn't joined up with TUG & started paying attention to relevant stuff on TUG-BBS. (Better to be lucky than smart, eh?)

More Disclosure: I have no clue about resort governance at our dinky points timeshare in the USA heartland. Ditto our overseas timeshare in a far-off distant land.

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

 

[tombo]

Putting aside the ROFR debate and looking into the original post."A true buyers market for high quality resorts." Yes prices are way down across the board and continue to drop but which weeks to choose and at what resorts? What resorts will come out of this economic disaster intact and still a vacation value? .Can those with too many blue weeks survive? Will developers do anything to keep resorts from flowing into the abyss of complete worthlessness ? What may seem like a good bargan now at some high quality resorts may not be if the spiral keeps continuing downward .

Like Alan I feel like the HOA's at sold out (or mostly sold out) resorts will decide their own fate. If they are run well and lucky enough to retain enough owners to keep MF's reasonable they should survive. If the HOA doesn't legally pursue owners who quit paying MF's and don't keep costs under control, they will possibly see their whole development fold. If there is a mass exodus of owners for any reason, the whole resort will be in trouble.

The new resorts with active onsite developer sales will be dependent on the developer being financially sound enough to keep paying the expenses while sales are slow through the next year or 2. They have reason to keep the resort from becoming worthless, but some developments which are mainly owned by the developer with few owners (Westgate Planet Hollywood for example) might not survive at all. Some developers might sell the resort or file bankruptcy if sales are dismal and the expenses are too high. If the resort is developer controlled and the developer gets greedy trying to subsidize their lost sales income by increasing MF's, that could cause the whole development to fail as new buyers are scared off by the high MF's, and current owners simply default.

Buying at the bottom and selling at the top are great things. I bought many weeks for great prices over the last few years. I researched and only bought weeks if they were at good resorts during good red weeks and I always purchased them at a a bargain price. I could have sold virtually every week I owned for a profit 1 year ago. Looking at my weeks in the current market, I don't think I have more than 2 weeks out of 20 that I could currently sell for a profit, and I purchased them all resale.

The million dollar question is what weeks to buy, at which resorts, and if any (or many) resorts will fold. At some point the weeks will hit bottom, some will fold, and if you knew when that was there would be deals to be had. Right now I feel it is a crap shoot and things are going to get a lot worse before they get better. My opinion is that if you are going to buy now, buy at a place you can drive to, at a resort you like, and during a time of year that you and your family could personally use. After buying quit looking at the prices weeks are selling for because it will probably make you sick as prices continue to drop (much like looking at my 401K does). Right now buying timeshares or anything involving real estate is very risky IMO.

 

[AwayWeGo]

Sold Out Is No Guarantee Of H. O. A. - B. O. D. Independence.

I feel like the HOA's at sold out (or mostly sold out) resorts will decide their own fate. If they are run well and lucky enough to retain enough owners to keep MF's reasonable they should survive. If the HOA doesn't legally pursue owners who quit paying MF's and don't keep costs under control, they will possibly see their whole development fold. If there is a mass exodus of owners for any reason, the whole resort will be in trouble.

From my various TUG-BBS readings on the subject, I take it that some timeshare companies keep on keeping on as the controlling authorities running resort HOA-BODs, not relinquishing their grip long after the resort is sold out.

There may be state laws on the subject, but even so those laws are worthless if enforcement is toothless or nonexistent.

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

 

[Vacation Dude]

Looking at my weeks in the current market, I don't think I have more than 2 weeks out of 20 that I could currently sell for a profit, and I purchased them all resale.

ouch

Do you think this would be better or worse with ROFR or ROFL?

 

[James1975NY]

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.

Ultimately the economy has an impact on all of this....

Poor economy = resorts sales are down = waiving ROFR = buyers are making lower offers "how low can I go" is the attitude these days.

It IS that simple.

 

[James1975NY]

ouch

Do you think this would be better or worse with ROFR or ROFL?

Does anyone hear purchase for profit on the resale market?

 

[tombo]

ouch

Do you think this would be better or worse with ROFR or ROFL?

The situation would be identical.

I would sell it for the highest price I could get a buyer to pay whether there was ROFR at the resort or not. The only difference would be that if there was ROFR, the wonderful individual who offered me more money to buy my week than anyone else did might not actually get to own the week. The resort (who wouldn't buy my week back at any price) might steal it from the buyer I had to find on my own. The buyer who got me out of a week I no longer wanted got rewarded by sending his money to the closing company, waiting for weeks or months to see if he would own the week, and he might end up getting nothing but his money back. The guy who saved me got screwed. The developer who wouldn't help me gets my week. I didn't get one penny more than I would have received from the buyer I found.

See why I hate ROFR?

No ROFL for me in this scenario. I would be ROFC (rolling on the floor cussing).

 

[MaryH]

My personal ROFR experience went like this. I was tring to purchase a Hyatt week in Key West watched several ebay auctions from different sellers and saw the same weeks ending price between 8000-8400 I was convinced these auctions were being price fixed by inside biding.When a new unit listed I decided to Email the owner and lowball offer $6000 off the bat.The owner emailed me back and stated that that wouldn't pass Hyatt ROFR which was 8000 for that unit.I watch the auction end and it ended at 8400.I watched a few more all in the same price range.To me it showed that the ROFR was creating a set floor price for that unit.Recently when Hyatt decided to selectively exercise ROFR the price for those units dropped by $2000.I'm not saying that ROFR is good or bad but from what I see the asking prices for resales with ROFR remained consistantly higher than without.

Transit,

A lot of recent auction for Hyatts in KW Silver and Bronze weeks ended at around 5K-6K recently. I talked to a reseller and he told me that those week used to go for 7-8K in the past.

 

[tombo]

Transit,

A lot of recent auction for Hyatts in KW Silver and Bronze weeks ended at around 5K-6K recently. I talked to a reseller and he told me that those week used to go for 7-8K in the past.

Those weeks coudn't possibly have sold for 5k-6k since Hyatt set the floor price at 8k using ROFR to prop up prices. Oh yeah, this is because they stopped using ROFR. Please show us the web site where Hyatt tells owners and buyers that they are or aren't ROFR'ing, and at what price so we can keep up with what weeks will sell for.

I think the fact that Hyatt and ROFR actually don't provide a "floor price" will become evident as prices continue to fall.

 

[Transit]

Transit,

A lot of recent auction for Hyatts in KW Silver and Bronze weeks ended at around 5K-6K recently. I talked to a reseller and he told me that those week used to go for 7-8K in the past.

Thanks I've been keeping an eye on them and I believe those Keywest Hyatts will survive this mess but I don't think we've hit bottom yet.

 

[Transit]

Those weeks coudn't possibly have sold for 5k-6k since Hyatt set the floor price at 8k using ROFR to prop up prices. Oh yeah, this is because they stopped using ROFR. Please show us the web site where Hyatt tells owners and buyers that they are or aren't ROFR'ing, and at what price so we can keep up with what weeks will sell for.

Everythings changing with this economic mess there also has not been so many of those units on the market all at once. But I get your point.

 

[Fredm]

I have a couple of contributions to make to the ROFR discussion.

The reason Marriott is not exercising its ROFR has nothing to do with current resale prices. Indeed, prices are lower than in the past. Marriott would get better opportunities now. They do not sell for less now, so their margins would be higher.

Nor does it have anything to do with how much inventory they do or do not need. Marriott exercised its ROFR opportunistically. They never bought for inventory. They bought when they had a buyer in hand for something they otherwise could not sell them at that moment, for various reasons. Marriott was the owner of record for 15 minutes.
That is why they would exercise at a price one day, and not the next.

They are not now exercising because they cannot sell their timeshare notes in the credit markets. They cannot monitize the loans.They must carry financed sales. The capital required to do so is huge. So, capital is being preserved. This is also the reason sales are down. Marriott is cutting expenses, not building new projects, and consolidating sales resources because they will sell themselves broke otherwise.
Starwood and every other large developer is dealing with exactly the same issue.

The debate over how ROFR impacts resale prices goes round and round.
Those that intuitively believe it props up prices will never understand the market dynamics that argue otherwise.
Problem is it is impossible to prove in the real world. If it were, it would have already happened.
It's a theoretical question, and therefore requires a theoretical answer, based on what is know of economic theory.
Fortunately, serious and credible theoretical study of the question has been made by faculty of several respected universities. All come to the same conclusion.
The best discussion/explanation I have found is here:
http://www.law.harvard.edu/programs/olin_center/papers/261_walker.php

It is 71 pages. For those that do not want to read it, it says that ROFR has a negative influence on price.

 

[timeos2]

It's hard to believe

It is 71 pages. For those that do not want to read it, it says that ROFR has a negative influence on price.

Darn academics! They can just RUIN a good theory!