ROFR is still alive..

[SueDonJ]

Sue-
You bring up an interesting point. What perplexes me, though, is what incentive does any seller have to inflate the price for the deal to go through ROFR? It would seem to be an easier transaction if through Marriott

If the ROFR waiver is submitted to Marriott for more than the agreed-upon purchase price and Marriott waives, the seller and buyer can still agree to the original terms and go through with the sale. No difference with what's paid by the buyer or what's gained by the seller. But say a buyer offers $100, the ROFR waiver is submitted for $1,000, and Marriott exercises ROFR. The buyer loses out based on a fraudulent ROFR, and the seller (and any commissioned agents) receive proceeds from Marriott based on the fraudulent $1,000 price.

Any scenario involving falsified ROFR may cause problems down the road if the purchase price on the deed is different from the ROFR waiver, which means one or the other must be changed prior to officially filing. It's pretty much a guarantee that the deed will be changed to reflect the figure that Marriott has already reviewed. That's fraud, for one thing. But for another, in the states where real estate taxes are billed directly to the owner and/or are based on purchase price, it's possible that the owner will be assessed taxes based on the higher price than what s/he actually paid.

(And least of all, the ROFR database that TUGger dioxide compiles may have errors. How can anybody be sure of what figure was actually waived or claimed by Marriott, unless the official ROFR waiver is reviewed? I think it's possible at least a few are not correct because not everybody reviews their paperwork. As well, some closing companies make you chase them for the ROFR waiver - how many can be bothered when they have all the other pertinent papers?)

 

[SueDonJ]

And heeeeere we go!!

:hysterical: :hysterical: Can't help but laugh!

 

[yumdrey]

No, unfortunately studies have shown that prices go down when ROFR is involved - you are falling for the sales weasel spin if you think otherwise. Sorry.

Not always.
Hilton is exercising ROFR actively and their prices has gone up quite much these days.
I am happy that I bought something during the last 2 years. If I need to buy something, the prices is almost double now!

 

[wvacations]

Closing companies were inflating the price on the ROFR. I got back paper work on a resale I bought and they included the ROFR papers they sent to Marriott (probabaly a paper I was never suppose to see.) They had "accidently" inflated the selling price by several thousand dollars. I think they were hoping Marriott would bite and they would get a better selling price. I made them resubmit the paper work with the correct price.

 

[timeos2]

Not always.
Hilton is exercising ROFR actively and their prices has gone up quite much these days.
I am happy that I bought something during the last 2 years. If I need to buy something, the prices is almost double now!

I'm happy that you feel prices are rising (a bit of a surprise as offers posted are going down - do you mean retail?). But in any case attributing it to ROFR is a fallacy. IF they are indeed rising on resale it is the overall quality/ reputation NOT ROFR as that plays no role in raising price. It can however lower it.

Glad you are happy with your purchase - enjoy!!

 

[rsackett]

I thought there was a rule against turning posts into ROFR arguments on the Marriott board.

Ray

 

[Beefnot]

The rationale that ROFR reduces prices has never made any sense to me. I've read several threads containing these arguments and it defies economic logic. I'd be interested to review any credible study and their methods for arriving at this conclusion.

The issue as I see it is when ROFR is not consistently applied. If consistently applied, there is an established floor beneath which a buyer knows that s/he will not be able to obtain the item. The buyer realizes that in order to obtain that thing of value, s/he must pay something above that floor. However, if ROFR is executed seemingly at random, then it arguable has little to no effect on prices, since there is no firm floor established, and thus no constriction of supply below an established price.

 

[Beefnot]

Hm, upon further reflection, I can see how an inconsistent application of ROFR could, theoretically, negatively impact prices. If the bearer of ROFR excercises it at erratic price points, then perhaps the demand for that good/service is diminished because buyers no longer have confidence in the market value of the good/service (as well as their ability to obtain that good or service), and thus lose interest in participating in the market for said good/service.

I as a buyer will not knowingly overpay for an item. So if I, as a buyer have no confidence what the "market value" of that item is because I may or may not be able to obtain it at $5 one day, $5,000 the next, and then $150 the next day, then what is the true value of the item for which I am comfortable paying?

Just thinking out loud.

 

[timeos2]

Here is one University Study - ROFR is BAD

Here is a study that concludes the effect to the SELLER is negative. It strongly recommends against granting any ROFR for any reason.

Part of conclusion:

"In short, the net benefit to the seller and special buyer is usually negative." AND

"Regardless of the possible reason for the existence of a ROFR, it is clear that this is a benefit that must not be conferred lightly by the seller to a buyer. Furthermore, as a ROFR is ex post inefficient, there is a case to be made against contractual arrangements that grant a ROFR [or MCC] in perpetuity."

Such a never ending ROFR is EXACTLY what these types of rules are. So again, avoid them if at all possible both as a buyer & seller. They do not benefit YOU.

 

[PamMo]

Purely anecdotal, but I have chosen not to bid on timeshares I thought for sure would be ROFR'd. It just seemed like a waste of my time. IMO, when it's exercised randomly, ROFR simply favors the developer/management company, allowing them to cherry-pick prime units at low prices to sell to their retail buyers.

 

[timeos2]

Purely anecdotal, but I have chosen not to bid on timeshares I thought for sure would be ROFR'd. It just seemed like a waste of my time. IMO, when it's exercised randomly, ROFR simply favors the developer/management company, allowing them to cherry-pick prime units at low prices to sell to their retail buyers.

A perfect example of "shrinking the buyer pool". This leads to a lack of and lower offers than a free market would likely bring. Thank you for posting.

 

[dioxide45]

Gee, knew it wouldn't take long for this to turn in to the semi annual TUG argument of the merits of ROFR.:deadhorse:

BTW, this is the thread where that is supposed to take place.

 

[Judi Kozlowski]

ROFR

Not the Marriott specifically as no one has wasted the time to look at that level of detail but if you search back about two years when the ROFR debate was raging you'll find the link to the University study that looked at ROFR in general and it's net affect on the market. At best it's neutral but that study concluded it is a negative and led to lowered prices due to the additional uncertainty it adds to the marketplace. In no case did they find it raised prices - they only found it lowered demand and prices as a result of ROFR. When you think it through that only makes sense. Why would anyone offer MORE for a purchase than the market calls for and have to deal with more delays and paperwork?

It makes perfect sense, as has often been pointed out here, to LOWER your bids for any ROFR both to compensate for the extra hassles, the possible loss of the sale after you hammer out a deal and the fact that all the buyer will get in either case is the agreed amount. Raising that number makes zero sense - if you lose one move on to the next (there are plenty out there) or look to a different resort. Plus many simply won't offer to buy at all - and you must have a real buyer in hand to activate ROFR - so the seller has to make extraordinary efforts to find such a buyer willing to risk a loss of the sale - and that buyer pool is reduced by the very presence of ROFR. So the owner / potential buyers lose all the way around while the ROFR developer cherry picks only what they desire while the owners have to do the dirty work. No way it's a benefit anyone except the ROFR holder. The rest is wishful thinking and/or sales BS. Sellers tend to want to think it somehow benefits them until they try to sell and fully realize it does not.

Thus one of my key timeshare rules. Never buy a resort with ROFR if you ever plan to sell.

From a resale agents point of view the resale prices go up when there is an ROFR present. When I first started working with Hilton eleven years ago the resale prices went up 57% the first year they started to exercise. At this point they have the most stable resale prices along with Disney Vacation Club. Marriott will stablize their prices by exercising. That is just my professional opinion.

 

[Beefnot]

Here is a study that concludes the effect to the SELLER is negative. It strongly recommends against granting any ROFR for any reason.

This particular game theorem deals with asymmetric information and or private values which i believe is being misapplied to a public auctions, and more specifically when a series of values are or can be known over time. I'm still skeptical. But in allusion to the article and to my prior musing, when the favored bidder has no apparent actual valuation, and instead appears to exercise ROFR haphazardly, this could be more disruptive to the demand curve and thus to market values than the mere existence of a ROFR.

 

[RX8]

This particular game theorem deals with asymmetric information and or private values which i believe is being misapplied to a public auctions, and more specifically when a series of values are or can be known over time. I'm still skeptical. But in allusion to the article and to my prior musing, when the favored bidder has no apparent actual valuation, and instead appears to exercise ROFR haphazardly, this could be more disruptive to the demand curve and thus to market values than the mere existence of a ROFR.

You lost me at "hello".

 

[Beefnot]

Another analysis which appears more intuitive to me (and easier to read...though still very academic and not geared to he layman).

 

[ampaholic]

You got it backwards. A) The seller gets the same price they agreed to-- no harm at all; B) Offers won't go down, they will go up. Supply will be reduced and buyers will fear their low numbers will get stolen by Marriott; C) Low priced comps will disappear from the market (shifting leverage to the seller) and providing current owners with support for their developer priced assets. Think about it. If you bought at $25K, you'd feel a whole lot better about your investment if the re-sales on eBay were going for $15K than $8K.

The fly in your soup is that it presupposes there is a fixed constant demand for Marriott timeshares and that they have no competition.

When the resale market is destabilized by aggressive ROFR-ing (a new word?) the buyers will just as likely move over to the competitors rather than ratchet up their demand for Marriott timeshares.

Imaging Caddy buying back all used Caddy's so that the cheapest Caddy you can find is $30,000? Do you think all the used car buyer's will just roll over and pay $30,000 for a used Caddy - or will a large percentage say "the heck with that" and go buy the used $12,000 Lincoln, or the $17,000 used BMW?

Offers won't go down or up - they will go elsewhere.

 

[ada903]

Looks like I threw a grenade in a mine field.

I am patiently waiting to see if Marriott will exercise ROFR on the properties I am buying - they are below typicaly eBay pricing, so if they are exercising it constantly, they would buy them back, if not, it must have been an isolated incident where they had a committed buyer on the wait list.

 

[AwayWeGo]

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

From a resale agents point of view the resale prices go up when there is an ROFR present.

Other way round.

When the resale prices go up sufficiently, then the timeshare companies with ROFR start snapping up the low-priced offerings for themselves.

When resale timeshare prices are in the tank, the timeshare companies with ROFR just let it slide.

ROFR = ROFL.

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

 

[jdunn1]

Why no mention of the Platinum Marriott Manor Club that sold last week or the week before on ebay for something like $200? If Marriott really has been exercising ROFR, then why would they pass on the $200 property and instead take a 5.5k one? Just saying.

...and I like reading the different threads in this post, but I was hoping this post could be used to report other ROFR instances. Instead, it has attracted a bunch of Marriott owners who want to vent about how/why their weeks should be worth more and now ROFR proves it.

 

[timeos2]

Why no mention of the Platinum Marriott Manor Club that sold last week or the week before on ebay for something like $200? If Marriott really has been exercising ROFR, then why would they pass on the $200 property and instead take a 5.5k one? Just saying.

...and I like reading the different threads in this post, but I was hoping this post could be used to report other ROFR instances. Instead, it has attracted a bunch of Marriott owners who want to vent about how/why their weeks should be worth more and now ROFR proves it.

It doesn't appear that Marriott is exercising ROFR except in an extremely rare case now & then. So there is nothing to report except "no ROFR".

 

[jimf41]

Interesting take on a way to increase profit.

Other way round.

When the resale prices go up sufficiently, then the timeshare companies with ROFR start snapping up the low-priced offerings for themselves.

As in "Buy High, Sell High"

When resale timeshare prices are in the tank, the timeshare companies with ROFR just let it slide.

As in "Don't Buy Low, Just Sell High"

ROFR = ROFL.

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

I always thought it was the other way around.

 

[windje2000]

It all makes me wonder if the demand for occupancy from trust points owners (who, generally speaking, own relatively few points) is skewed towards 'low priced' points occupancy, which is prompting VAC to buy resales in places like Manor Club to fulfill that demand.

 

[kjd]

Without starting that old and tortured discussion about whether ROFR raises resale market prices it seems that VAC will purchase units where they either have a buyer in waiting (or feel that they can make a quick sale) or they need a unit to balance out their inventory. Otherwise, to ROFR because prices are cheap, they will end up in the same financial mess as before the spinoff. That is, stuck with a lot of unsold inventory and no reasonable expectations to get rid of it. And, this time they won't have the security of mother Marriott to bail them out.

It's a good bet that VAC really doesn't fully know the inventory needed to support their point systems. It'll take a few years of operation to know that. Therefore, we might see selected ROFR purchases by VAC but IMO they're pretty much done with ROFR unless the market really moves upward. Right now they can buy all the silver weeks they want at prices below $1,000. Gold for a few bucks more. They won't touch most of them. They would have to pay the maintenance costs.

ROFR is a great deal for VAC because buyers have to get them to sign off before a sale can be closed. It's just that there's not much advantage left for them use it.

 

[flyboy0681]

My purchase at Frenchman's Cove for $2,500 passed muster with Marriott.