ROFR Conclusion - It hurts seller

[cp73]

I know this has been talked about to death but I have arrived at a new conclusion on ROFR. Maybe others have come to this conclusion before also. I now believe that the ROFR hurts sellers in some instances. Yes hurts! My logic is as follows:

In good times (a year or so ago) when someone wanted to unload their unit on Ebay they would get some low ball offers. The auction may close if no reserve. And then later Marriott would snatch it from them using ROFR. However, buyers knowledgeable about ROFR would not bid when the offering prices were too low because they know that Marriott is going to snatch it up from them. So therefore they didn't bid and waste their time.

Today what we are seeing is that there is more bidding activity at the low end. (Go look at Dioxide's website). Because today we no longer believe that Marriott will buy back if the selling price is below 60%, we believe the bottom is lower. Therefore, because today we don't know where the bottom allowed price will be, more buyers are bidding, uping the price that ends up going to the seller. Because we now believe a price lower than 60-50% has a good chance of pasing ROFR. We still just don't know what that bottom is but we do know it is lower. In the end the seller who has to sell his unit is getting more dollars for his unit because now more potential buyers are bidding hoping to get a better price because the the ROFR limits have been lowered and we don't know where that is.

In the long run if there was no ROFR I believe the auction prices, would be higher and benefit the sellers.


Although I guess you could build an agrument that if Marriott wasn't buying back units (ROFR) there would be less buyers in the market place and decrease the demand.:annoyed:

 

[timeos2]

ROFR great for developers Buyers - Sellers beware!

In the long run if there was no ROFR I believe the auction prices, would be higher and benefit the sellers.


Although I guess you could build an agrument that if Marriott wasn't buying back units (ROFR) there would be less buyers in the market place and decrease the demand.:annoyed:

Yes - No ROFR helps sellers.

No - there wouldn't be less buyers because ROFR doesn't happen until a buyer is in hand. It doesn't help create buyerrs (it discourages them as you correctly noted), it sets no "floor" price as it is unknown if it will be used at ANY price and it hurts sellers. It helps only the Developers and no one else.

Nothing will change that - not even Perrynomics which, based on the recent fall in resale Marriott pricing, also appers to be a failure. Why those silly owners lowered their prices merely to SELL is sure a mystery isn't it? Everyone knows they should have raised them so buyers would have to pay. They were willing if only the price had been higher! Yeah, right.

 

[AwayWeGo]

Suspicions Confirmed.

ROFR = ROFL.

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

 

[icydog]

I'm not sure the market works that way. I think people are seeing lower prices because the demand is lower. I think that Marriott is reacting to the lower demand and allowing lower prices to skip past ROFR. Whether this benefits the seller is anyone's guess. I, for one, believe the seller would be better off in a good market since the price he will ultimately get will be higher.

And, I'd really like to know, where are these sellers who forget to put a Reserve on their Ebay auctions?

 

[dougp26364]

All I can say is, I believe if you look at historical sales, those timeshares where the developer exercises ROFR the sales prices are higher. So, IMO, ROFR hurts buyers but helps sellers.

I know that I have two timeshares that do not have ROFR that I would consider selling. Unfortunately the best I could hope for would be around $1,000. The timeshares I would like to replace them with have ROFR and the selling prices are closer to $10,000. I just can't afford to let two timeshares go for a couple thousand dollars (at best) and then turn around and spend close to twenty thousand dollars on it's replacements (Marriott or HGVC). Somehow or another, I don't see ROFR hurting the sellers all that much.

 

[dougp26364]

....And, I'd really like to know, where are these sellers who forget to put a Reserve on their Ebay auctions?

That would be the PCC's. I see them dumping timeshare's in no reserve auctions often enough.

 

[Pit]

I agree with the OP. My two cents...

http://tugbbs.com/forums/showpost.php?p=583679&postcount=30

 

[rsackett]

.....
In good times (a year or so ago) when someone wanted to unload their unit on Ebay they would get some low ball offers. The auction may close if no reserve. And then later Marriott would snatch it from them using ROFR. However, buyers knowledgeable about ROFR would not bid when the offering prices were too low because they know that Marriott is going to snatch it up from them. So therefore they didn't bid and waste their time.

Today what we are seeing is that there is more bidding activity at the low end. (Go look at Dioxide's website). Because today we no longer believe that Marriott will buy back if the selling price is below 60%, we believe the bottom is lower. Therefore, because today we don't know where the bottom allowed price will be, more buyers are bidding, uping the price that ends up going to the seller. Because we now believe a price lower than 60-50% has a good chance of pasing ROFR. We still just don't know what that bottom is but we do know it is lower. In the end the seller who has to sell his unit is getting more dollars for his unit because now more potential buyers are bidding hoping to get a better price because the the ROFR limits have been lowered and we don't know where that is.
In the long run if there was no ROFR I believe the auction prices, would be higher and benefit the sellers.


Although I guess you could build an agrument that if Marriott wasn't buying back units (ROFR) there would be less buyers in the market place and decrease the demand.:annoyed:

So you are sating the current selling prices are higher than they were a year ago because Marriott is not really exercising ROFR now??? But wait prices are lower?


In the end I do not think ROFR effects price that much one way or the other. Some people say "I will not buya TS that has ROFR", others say "I have upped the amount I offered to pay to get past ROFR". I doubt if either has a big effect on average selling price.

One thing I do know is that Marriott put ROFR in place so they could make more money, not to protect the owners investments!

Ray

 

[cp73]

So you are saying the current selling prices are higher than they were a year ago because Marriott is not really exercising ROFR now??? But wait prices are lower?
Ray

No. I am saying that it is possible that in auction sales some sellers maybe getting more for their money now because more people are bidding because they believe now they have a better chance of getting a deal because the likelyhood of Marriott exercising ROFR is less and less. I believe this is occurring at the bottom end sales.:whoopie:

 

[chuckles]

In my case, as a buyer, ROFR benefits the seller, because I would be wasting everyone's time if I made an offer that couldn't possibly pass ROFR.

Which leads me to this thought: What prohibits a "motivated seller" from faking an offer of say... 45% of retail to see if Marriott will ROFR it? I'm not sure how much would be owed if Marriott waived ROFR, but the deal fell apart. It would seem like less hassle than going through an auction and getting less than that?

Having a floor on prices probably helps the seller more times than not. Not knowing what that floor is causes the frustration.

 

[dioxide45]

This shouldn't be a new thread. There is a thread where general ROFR discussion should take place.

http://www.tugbbs.com/forums/showthread.php?t=79996

 

[Pit]

In my case, as a buyer, ROFR benefits the seller, because I would be wasting everyone's time if I made an offer that couldn't possibly pass ROFR.

You wouldn't be wasting the seller's time. If your offer is accepted, the unit is sold, whether it passes ROFR or not.

Which leads me to this thought: What prohibits a "motivated seller" from faking an offer of say... 45% of retail to see if Marriott will ROFR it? I'm not sure how much would be owed if Marriott waived ROFR, but the deal fell apart. It would seem like less hassle than going through an auction and getting less than that?

I'm sure this happens. I think the ROFR waiver fee is around 100 bucks.

Having a floor on prices probably helps the seller more times than not. Not knowing what that floor is causes the frustration.

The problem is that ROFR is not a floor. A buyback program could create a floor, but ROFR does not.

 

[timeos2]

It's getting deep. The ROFR believers REALLY want it to be true. Too bad it isn't

You wouldn't be wasting the seller's time. If your offer is accepted, the unit is sold, whether it passes ROFR or not.

It is amazing how many still want to believe that somehow magically the sale price goes up with ROFR. The week is SOLD at the (usually) low offered price - the seller gets not one penny more and may in fact get less and the buyer is left disappointed. How did that help raise the price to the seller? It didn't.

I'm sure this happens. I think the ROFR waiver fee is around 100 bucks.

So the seller is out at least $100 - probably more as they find other "discounts" they won't pay.

The problem is that ROFR is not a floor. A buyback program could create a floor, but ROFR does not.

Exactly. If Marriott or any other developer wanted to actually support prices there would be a floor - a price they would buy back any week rather than let it go to any offer. But they don't want that, never have, and they just want the cheap weeks - that they grab at the LOW OFFERING PRICE from the seller - to resell at a huge profit all while telling the buyer how "ROFR will protect prices". Hogwash. It plays to the buyer who wants to think they are "protected". It's a mistake to believe in it but far too many seem to have bought into the dream.

 

[AwayWeGo]

Understanding The Enduring Pull Of R. O. F. R.

If Marriott or any other developer wanted to actually support prices there would be a floor - a price they would buy back any week rather than let it go to any offer. But they don't want that, never have, and they just want the cheap weeks - that they grab at the LOW OFFERING PRICE from the seller - to resell at a huge profit all while telling the buyer how "ROFR will protect prices". Hogwash. It plays to the buyer who wants to think they are "protected". It's a mistake to believe in it but far too many seem to have bought into the dream.

During the relatively brief span of years (since 2002) it has taken me to go from 0 to 60 (i.e., to get up mostly to speed) on timeshares, mainly via TUG & TUG-BBS, the mistaken faith in ROFR as propping up timeshare values has emerged as the No. 1 enduring piece of weasel-speak baloney that an astonishing number of otherwise savvy timeshare folks swallow hook & line & sinker.

I do not understand how come people -- some of'm -- with a perfectly realistic grasp of all the other ins & outs of timeshares & timesharing still fall for the ROFR fairy tale.

The closest I can get to understanding the phenomenon is via the admission right here on TUG-BBS by some ROFR fans that what they really like is the idea that nobody can buy in to their timeshare cheap because ROFR filters out the bottom-feeding bottom hunters -- i.e., because those owners paid big bux for theirs, there's satisfaction in knowing everybody else has to pay big bux too.

That's powerful enough to wipe out any regard for the fact that owners still sell units dirt cheap while ROFR stacks the deck so that no one but the timeshare company gets to buy units dirt cheap. That's mox nix to the ROFR fans, just so long as all those the bargain hunters keep on getting shut out.

Nothing else that I've seen spelled out on TUG-BBS accounts for that otherwise unfathomable & indelible affection for ROFR.

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

 

[janapur]

All I can say is, I believe if you look at historical sales, those timeshares where the developer exercises ROFR the sales prices are higher. So, IMO, ROFR hurts buyers but helps sellers.

I know that I have two timeshares that do not have ROFR that I would consider selling. Unfortunately the best I could hope for would be around $1,000. The timeshares I would like to replace them with have ROFR and the selling prices are closer to $10,000. I just can't afford to let two timeshares go for a couple thousand dollars (at best) and then turn around and spend close to twenty thousand dollars on it's replacements (Marriott or HGVC). Somehow or another, I don't see ROFR hurting the sellers all that much.

At the risk of offending you, and it certainly is not my intention to do so, is it possible that the two ts which you would consider selling are only worth around $1,000 and perhaps ROFR has nothing to do with their value? (or lack thereof?)

I have never considered purchasing any ts that messes with ROFR. A waste of time? Yes, mine. I believe it to be another developer scam, manipulating buyers into believing it is a value while discouraging potential buyers when they want/need to resell.

My husband and I rehab and resell houses (I have been doing this for about 20 years- long before all of the cable tv flipping shows!) Auctions have become the popular way to sell the abundance of foreclosures flooding this devastating market. Those with a reserve attract fewer buyers PERIOD. Absolute auctions bring in so many more buyers, create greater competition, thus a higher sales price. Many sellers are fearful of not having a reserve. It is a legitimate risk and concern. Often these reserve sellers will not attract the buyers, thus not meet their reserve and soon we will see the same house for sale at an absolute auction where the seller is now the BANK.

Jana