ROFR metric / Ongoing ROFR Activity

[SueDonJ]

Interesting words in my contract which seem to make the cost to Marriott higher if they choose to grab it.

"The Seller(s) hereby agree to pay commission to *****, Orlando FL in the amount of $3450.28. ...... In the event that the Developer exercises their right of first refusal on this unit the Seller hereby authorizes and directs the Developer to pay the commission directly to the Brokers listed above in the amounts stated above from the proceeds of the sale."

What legitimate Seller in their right mind would let DC Points go for $1/point PLUS agree to pay that oversized commission, when the market supports a much higher resale value??

You're not afraid that by asking for ideas to help get past ROFR and then posting this one, that Marriott might decide to look very closely at this transaction for the possibility of fraud?

 

[thinze3]

What legitimate Seller in their right mind would let DC Points go for $1/point PLUS agree to pay that oversized commission, when the market supports a much higher resale value??

IDK. Maybe a death in the family. ?? Besides, eBay IS the resale market for most timeshares and points nowadays.

You're not afraid that by asking for ideas to help get past ROFR and then posting this one, that Marriott might decide to look very closely at this transaction for the possibility of fraud?

This is not my idea! Being that I have had zero communications with the seller or title company and the fact these words in their document are exactly as came to me, no I am not afraid at all. I think this company is just charging a fixed amount to sell these points for the owner or estate.

 

[thinze3]

This may be the cynic in me...but it sounds like broker/seller combined wanted to get a total of $5K for these and together they likely will come out ahead if MVC does indeed exercise ROFR (as presumably the seller would not pay $3450 commission if you end up getting them...I'm thinking something far less will be charged if they go to you). It appears they are showing the commission as the difference between your bid and the $5K. Who knows if seller and broker have a behind the scenes deal to square up after the fact.
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I have had this same thought. They may know exactly where the ROFR break point is and be just beneath it so as to make it happen.

I haven't signed yet. I wonder if I should ask to see the sales agreement between the 2.

 

[Fasttr]

The Seller(s) hereby agree to pay commission to *****, Orlando FL in the amount of $3450.28. ...... In the event that the Developer exercises their right of first refusal on this unit the Seller hereby authorizes and directs the Developer to pay the commission directly to the Brokers listed above in the amounts stated above from the proceeds of the sale.

I remember seeing something here on TUG a few years ago that brokers get paid by Marriott even if ROFR is exercised. It seems fair. A sale is a sale and they should be compensated for their work.

suzannesimon....I don't understand your logic.

No ROFR: Seller gets $1500 for points and Seller presumably has to pay Broker some amount of commission.

ROFR: Seller gets 1500 and MVC has to pay Broker commission of $3500. This is a better deal for the Seller as the Seller does not have to pay any commissions..

The concept of ROFR is that MVC is allowed to step into the shoes of the buyer....which would be to simply pay $1500, just as the buyer thinze3 plans to do. If the deal were the same to a non-MVC buyer, or conversely to MVC as the buyer via ROFR, in either case, the seller should be compensating the broker for the commissions....unless a game is being played and this smells of game being played.

If the deal to thinze3 were that he had to pay $1500 and pay the Brokers commissions, then I would agree that MVC via ROFR would have to do the same...but that's not how the deal to thinze3 is written. Its written as 1 deal to thinze3, and a different deal to MVC if they ROFR.

And lastly....this part is very poorly written. Seller hereby authorizes and directs the Developer to pay the commission directly to the Brokers listed above in the amounts stated above from the proceeds of the sale. If MVC triggers their ROFR right, MVC is paying money....they are not receiving "Proceeds of the Sale" so how can they pay the Broker Commissions from "Proceeds of the Sale"??

 

[suzannesimon]

After 30 years in real estate, I can tell you buyers always indirectly pay the commission in the purchase price. In this case they split it out and are agreeing to it as a separate charge to the buyer. Admittedly, the commission seems excessive but I don't know what is chargedto unload a timeshare for someone who wants to get rid of it. In commercial transactions, the buyers frequently pay the commission to their brokers. That's not to say there are not shenanigans going on here.

 

[Fasttr]

After 30 years in real estate, I can tell you buyers always indirectly pay the commission in the purchase price. In this case they split it out and are agreeing to it as a separate charge to the buyer. Admittedly, the commission seems excessive but I don't know what is chargedto unload a timeshare for someone who wants to get rid of it. In commercial transactions, the buyers frequently pay the commission to their brokers. That's not to say there are not shenanigans going on here.

The point here being that if thinze3 buys it, the Seller pays the commissions.

If MVC exercises ROFR, MVC pays the commissions.

I don't see how that is within the spirit OR the rules of ROFR.

 

[suzannesimon]

I'm sure it isn't. Marriott has probably seen all kinds of schemes and decides if they want it badly enough. We also don't know how much upfront retainer fee was paid by the seller to the broker. Broker is probably double dipping.

 

[SueDonJ]

The point here being that if thinze3 buys it, the Seller pays the commissions.

If MVC exercises ROFR, MVC pays the commissions.

I don't see how that is within the spirit OR the rules of ROFR.

It's not. If Marriott elects ROFR they're entitled to the purchase on the exact same terms as the contracted buyer, and, sellers have no right to impose different terms in the event ROFR is in play. Legally this setup doesn't stand a chance of surviving a challenge from the Seller if Marriott elects ROFR and holds the Seller to the original terms.

 

[Fasttr]

It's not. If Marriott elects ROFR they're entitled to the purchase on the exact same terms as the contracted buyer, and, sellers have no right to impose different terms in the event ROFR is in play. Legally this setup doesn't stand a chance of surviving a challenge from the Seller if Marriott elects ROFR and holds the Seller to the original terms.

Agreed.

By the looks of it...all the Broker did was take their normal contract which reads like this....
The Seller(s) hereby agree to pay commission to *****, Orlando FL in the amount of $X. ...... In the event that the Developer exercises their right of first refusal on this unit the Developer hereby authorizes and directs the Seller to pay the commission directly to the Brokers listed above in the amounts stated above from the proceeds of the sale.

and swapped the the bolded words "Seller" and "Developer" so it looked like this.
The Seller(s) hereby agree to pay commission to *****, Orlando FL in the amount of $3450.28. ...... In the event that the Developer exercises their right of first refusal on this unit the Seller hereby authorizes and directs the Developer to pay the commission directly to the Brokers listed above in the amounts stated above from the proceeds of the sale.

I say this because as mentioned in post #204 above, the way its written with the word Developer in there doesn't even make sense as the Developer can't pay anybody from the "proceeds".

 

[thinze3]

I agree. It looks like it will cost me about $3400 less to make the purchase than it would Marriott.

 

[tubelaw]

I think your misreading the contract. The language simply authorizes the developer to pay the broker directly instead of the seller. So the developer is "directed" to pay the broker the purchase price up to the amount of the commission. Here the purchase price is less so the seller would have to make up the difference. It's akin to a bank issuing a mortgage to a purchaser and paying the broker directly from the mortgage proceeds instead of seller cutting a check. As stated above Marriott steps into the shoes of the buyer and only has to pay the purchase price. Seller would have to make up the difference on the commission if that really is the commission.

 

[dioxide45]

I think your misreading the contract. The language simply authorizes the developer to pay the broker directly instead of the seller. So the developer is "directed" to pay the broker the purchase price up to the amount of the commission. Here the purchase price is less so the seller would have to make up the difference. It's akin to a bank issuing a mortgage to a purchaser and paying the broker directly from the mortgage proceeds instead of seller cutting a check. As stated above Marriott steps into the shoes of the buyer and only has to pay the purchase price. Seller would have to make up the difference on the commission if that really is the commission.

I think you may be right. I think the issue with ROFR, is that Marriott pays out directly to the owner of record. So the broker wants to ensure that they get their commission. In this case, Marriott can't distribute more than they are paying for the week, unless the broker has increased the purchase price on the contract to include the commission and the price from the winning bid.

 

[JIMinNC]

I think you may be right. I think the issue with ROFR, is that Marriott pays out directly to the owner of record. So the broker wants to ensure that they get their commission. In this case, Marriott can't distribute more than they are paying for the week, unless the broker has increased the purchase price on the contract to include the commission and the price from the winning bid.

Wait...since this was an eBay sale, can traditional brokers who don't have title to the week/points (and are simply acting as a broker) sell on eBay? I was under impression the timeshare companies selling on eBay are mainly the companies that charge people big up-front fees to take the timeshares off their hands and which actually take title to the properties before selling them.

 

[dioxide45]

Wait...since this was an eBay sale, can traditional brokers who don't have title to the week/points (and are simply acting as a broker) sell on eBay? I was under impression the timeshare companies selling on eBay are mainly the companies that charge people big up-front fees to take the timeshares off their hands and which actually take title to the properties before selling them.

They are or could be. There is nothing preventing a broker from selling on Ebay. These companies don't always take title to the property. Often they just get a POA from the owner and then take care of everything from there.

 

[thinze3]

I think you may be right. I think the issue with ROFR, is that Marriott pays out directly to the owner of record. So the broker wants to ensure that they get their commission. In this case, Marriott can't distribute more than they are paying for the week, unless the broker has increased the purchase price on the contract to include the commission and the price from the winning bid.

The selling price on the contract has not changed. Written just as eBay auction.

Wait...since this was an eBay sale, can traditional brokers who don't have title to the week/points (and are simply acting as a broker) sell on eBay? I was under impression the timeshare companies selling on eBay are mainly the companies that charge people big up-front fees to take the timeshares off their hands and which actually take title to the properties before selling them.

The broker is simply selling. Their name is not on the documents other than the commission. The closing company appears to be representing the seller, as the seller names, Mr & Mrs S****** appear with the closing agents name (LPOA J*** *****) in parenthesis.

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[JIMinNC]

The selling price on the contract has not changed. Written just as eBay auction.




The broker is simply selling. Their name is not on the documents other than the commission. The closing company appears to be representing the seller, as the seller names, Mr & Mrs S****** appear with the closing agents name (LPOA J*** *****) in parenthesis.

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So based on the language posted, it sounds like this is how the cash flow would work:

1) If Marriott waives ROFR and lets the deal go through: Seller pays broker $3450 and Buyer pays seller $1500; Seller has a net cost of -$1950; Buyer has a net cost of -$1500 and owns the points; Broker nets +$3450.

2) If Marriott exercises ROFR: Marriott pays Seller $1500 and pays the Broker $3450, for a total cost of -$4950; the Seller nets +$1500; the Broker still gets their +$3450; the Buyer pays nothing/gets nothing.

So in this scenario, the Seller is better off if Marriott exercises ROFR since Marriott pays the Broker commission rather than the Seller. Could that explain why they sold at such a low price on eBay and structured the contract this way? Maybe the deal is designed to cause Marriott to Exercise ROFR, so it's sold at a price at which the Broker thinks Marriott will exercise. The Broker gets their $3450 either way, so they really don't care what the sales price is - they just wanted to sell quickly on eBay at any price so they get paid. If they had listed the points in a more traditional manner, at a price that would definitely pass ROFR, the Seller could have netted as much as $3600 after paying the Broker's commission, but at that price the points may not have sold for a while.

What is unknown is whether Marriott would consider this a valid contract since the cash flows are different depending upon who winds up buying the points in the end.

 

[dioxide45]

So based on the language posted, it sounds like this is how the cash flow would work:

1) If Marriott waives ROFR and lets the deal go through: Seller pays broker $3450 and Buyer pays seller $1500; Seller has a net cost of -$1950; Buyer has a net cost of -$1500 and owns the points; Broker nets +$3450.

2) If Marriott exercises ROFR: Marriott pays Seller $1500 and pays the Broker $3450, for a total cost of -$4950; the Seller nets +$1500; the Broker still gets their +$3450; the Buyer pays nothing/gets nothing.

So in this scenario, the Seller is better off if Marriott exercises ROFR since Marriott pays the Broker commission rather than the Seller. Could that explain why they sold at such a low price on eBay and structured the contract this way? Maybe the deal is designed to cause Marriott to Exercise ROFR, so it's sold at a price at which the Broker thinks Marriott will exercise. The Broker gets their $3450 either way, so they really don't care what the sales price is - they just wanted to sell quickly on eBay at any price so they get paid. If they had listed the points in a more traditional manner, at a price that would definitely pass ROFR, the Seller could have netted as much as $3600 after paying the Broker's commission, but at that price the points may not have sold for a while.

What is unknown is whether Marriott would consider this a valid contract since the cash flows are different depending upon who winds up buying the points in the end.

I am not sure the cash flow is like that. I see it more like this.

1) If Marriott waives ROFR and lets the deal go through: Seller pays broker $3450 and Buyer pays seller $1500; Seller has a net cost of -$1950 -$3450; Buyer has a net cost of -$1500 and owns the points; Broker nets +$3450 +$4950. The seller in the end here is getting nothing. They probably paid big bucks to unload it. I think they are including the $3450 in the contract as this is the upfront fee the seller has paid to "dispose" of their points. Thus the seller has already paid the commission.

2) If Marriott exercises ROFR: Marriott pays Seller $1500 $0 and pays the Broker $3450 $1500, for a total cost of -$4950; the Seller nets +$1500; the Broker still gets their +$3450; the Buyer pays nothing/gets nothing. the broker probably gets the $1500 and any fee they collected from the seller.

 

[JIMinNC]

I am not sure the cash flow is like that. I see it more like this.

1) If Marriott waives ROFR and lets the deal go through: Seller pays broker $3450 and Buyer pays seller $1500; Seller has a net cost of -$1950 -$3450; Buyer has a net cost of -$1500 and owns the points; Broker nets +$3450 +$4950. The seller in the end here is getting nothing. They probably paid big bucks to unload it. I think they are including the $3450 in the contract as this is the upfront fee the seller has paid to "dispose" of their points. Thus the seller has already paid the commission.

2) If Marriott exercises ROFR: Marriott pays Seller $1500 $0 and pays the Broker $3450 $1500, for a total cost of -$4950; the Seller nets +$1500; the Broker still gets their +$3450; the Buyer pays nothing/gets nothing. the broker probably gets the $1500 and any fee they collected from the seller.

I think what you're saying in 1) is that the buyer has already paid the $3450 to the Broker and the Broker will also keep the $1500, for a total net to the Broker of $4950. I could see where it might work that way, if the seller paid a disposal fee up front and now the Broker is just getting what he can in addition for the total take of $4950.

But in case 2), it would make sense that the intent of ROFR is that Marriott would pay the exact same price as the Buyer, or $1500. So your math makes sense in that regard. But the language thinze3 posted was:

In the event that the Developer exercises their right of first refusal on this unit the Seller hereby authorizes and directs the Developer to pay the commission directly to the Brokers listed above in the amounts stated above from the proceeds of the sale.

So that sounds like Marriott is paying the Commission to the Broker as part of the transaction, not just the $1500 price. If the Seller had already paid the $3450 upfront, why would Marriott need to pay it again? That's what is confusing to me. If Marriott has to pay the $3450 again, then the Broker would be double-dipping and would net $8400. I would think that would definitely be unethical.

 

[dioxide45]

I think what you're saying in 1) is that the buyer has already paid the $3450 to the Broker and the Broker will also keep the $1500, for a total net to the Broker of $4950. I could see where it might work that way, if the seller paid a disposal fee up front and now the Broker is just getting what he can in addition for the total take of $4950.

But in case 2), it would make sense that the intent of ROFR is that Marriott would pay the exact same price as the Buyer, or $1500. So your math makes sense in that regard. But the language thinze3 posted was:



So that sounds like Marriott is paying the Commission to the Broker as part of the transaction, not just the $1500 price. If the Seller had already paid the $3450 upfront, why would Marriott need to pay it again? That's what is confusing to me. If Marriott has to pay the $3450 again, then the Broker would be double-dipping and would net $8400. I would think that would definitely be unethical.

I think the issue here is what is bolded:

In the event that the Developer exercises their right of first refusal on this unit the Seller hereby authorizes and directs the Developer to pay the commission directly to the Brokers listed above in the amounts stated above from the proceeds of the sale.

The issue is that the proceeds of the sale will only be $1500, not $4950. So Marriott can't pay out more than there is in the sale. The wording is probably standard verbiage where they just change out the numbers depending on the details of the transaction. The problem here is that the details of this transaction make the wording not make sense.

 

[5infam]

Just Passed ROFR!!!

So a few weeks back, I posted that I got a call from Marriott about a resale for a Maui Ocean Club, Island view Napili 2 bedroom, every other year. I was asking about the price of the unit here on TUG, and folks were kind enough to educate me on current prices. So I passed on the Marriott resale and looked at what else was out there. I would like to be in the new towers, but what I really need is an EOYE, 2 bedroom, any view is fine with us, as long as it fits in our budget. And what would even be better is 2 EOYE 2 bedrooms, so I can book at the 13 month window. As I was looking around at all of the resale sites, I sort of forgot about TUG's marketplace and decided to take a peek. Well low and behold there was a 2 bedroom, MGV, in the original towers listed for $3,500. So I called the broker, David Patchanian, from ATimeshare.com, to see if that was real or a mistake. He confirmed it was real, so I said what the heck, let's see if it passes ROFR. Based on the ROFR metrics in the sticky, I didn't think I had a chance. However, to my surprise, I just heard from David that Marriott waived their ROFR!!!! I still have to go through closing, but it will close in plenty of time for me to make my 2018 June reservation and we are super excited!!!

Before I found out about passing ROFR, I also made a bid this morning on a Napili 2 bedroom, Island view EOYE, with a different broker. So if the seller accepts and we pass ROFR again, I could end up with my 2 weeks EOYE, one in the original towers and one in the new towers. Either way, I know I at least have 1 week secured, and for what I think is a really good price.

Thanks to the folks here on TUG for the great advice!! I also updated ROFR.net so this deal can be part of the ongoing data collection. Looking forward to many more years in Maui, and now I can sell off my 1 bedroom to my friend that wants to buy it from me, so things are working out. :whoopie:

 

[Slinger]

Congrats!

That is an insane price!!! I am in escrow on mine at $6500 to compare. You did amazing!!

 

[5infam]

Congrats!

That is an insane price!!! I am in escrow on mine at $6500 to compare. You did amazing!!

Thank you - I wish I could take credit as a super negotiator or something, but I offered full ask and just got extremely lucky! Congratulations on your deal as well. I was expecting to pay about $7K, so I you are probably right in market. Good luck!!

 

[frank808]

Isnt mgv marriot grand vista?

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[Fasttr]

Isnt mgv marriot grand vista?

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I read it that way too....but then realized 5infam was trying to say the view was Mountain/Garden View....at least that's my assumption.





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[5infam]

I read it that way too....but then realized 5infam was trying to say the view was Garden View....at least that's my assumption.

Yes sorry, MGV is Mountain/Garden View at Maui Ocean Club.