The Marriott ROFR Debate: helpful to sellers or not?

[Icarus]

I don't see how it can hurt the seller, who is getting the price regardless, and I don't see how it can do anything but help the owners. Anytime Marriott applies ROFR than you can assume the seller's price was below market, and they are in turn reselling it at a higher price, raising the price floor. And Marriott is in the best position to know what the price floor should be. I think almost all of the negatives about ROFR come from buyers looking for a bargain or steal, and while I don't blame them for complaining, as a owner I certaining don't want to see bargain pricing on my units. Of course as a buyer I would look at it differently

I'm not sure what people are looking for Marriott to do. ROFR is clearly spelled out in the deed. I don't believe I have ever seen a seller complain about being ROFR'd unless it was a "friendly" transaction, but there are other ways of handling those....

Chuck

You are assuming things about Marriott's ROFR process that aren't true.

There is no floor on selling prices with or without ROFR, and Marriott doesn't exercise ROFR to create a floor on prices. They exercise it when they think they can make a profit for themselves by doing so, and if they don't want or need that inventory, they won't exercise. They aren't doing it out of some altruistic reason. They do it simply to make more profits.

The salespeople would have you believe exactly what you said. That ROFR protects owners. It doesn't.

The timeshare business is a heck of a business for a company like Marriott. They make money no matter what an owner does. Want to occupy? They make money. Want to trade for points? They make more money. Want to exchange? They make money. Want to sell? They make more money. Time for a refurbishing of the units? They make more money. Time to increase those maint. fees? They make more money. Want to rent your week through Marriott? They make more money. Want to sell your week through Marriott? They make more money.

What a business.

-David

 

[cp73]

You are assuming things about Marriott's ROFR process that aren't true.

There is no floor on selling prices with or without ROFR, and Marriott doesn't exercise ROFR to create a floor on prices. They exercise it when they think they can make a profit for themselves by doing so, and if they don't want or need that inventory, they won't exercise. They aren't doing it out of some altruistic reason. They do it simply to make more profits.

-David

David,

I agree with you on the ROFR. Its just a matter of when Marriott needs inventory and the price is right. It has nothing to do with holding the value for owners.

Another thing I would point to is DSV I and DSV II. DSV I does not have ROFR and DSV II does have it. Both resales prices are very consistent with one another. The resorts are on the same property and pretty similar. In fact DSV I might even sell for slightly more than DSV II, although probably has nothing to do with ROFR.

 

[thinze3]

Put yourself into the shoes of a typical timeshare wannabe owner that does NOT spend hours reading and writing about timeshares on the internet. Now, suppose you (the not knowing much about timeshares you) call Stroman Realty, GMAC Realty, Holiday Resales, or even Seth Nock looking to buy a timeshare. You want to buy Marriott at some resort like NCV, so you ask how much this resort sells for on the resale market.

The agent says, "The developer price is $33K, but I can probably get you into one for about 60% of that if your lucky." You ask, "Why not 50% or even 40%." The agent responds, "Anything less than 60% and Marriott will take the unit away because it has Right Of First Refusl. If you want to own a prime Marriott property like Newport Coast, this is what you will have to pay." You look at your wife for a minute, shrug your shoulders and then say, "How long will it take to write up the offer?" Agent, "I'll have it all written up for you tomorrow sir." You hang up the phone and hug your wife because you are sooo happy.

I can tell you that I have read this exact expression of words before from people like Seth and would have to suspect that experienced timesahare resellers nationwide utter the similar words. Consequently, I personally don't see how ROFR can do anything but help prop up the price of a typical Marriott. Remember we are talking about the typical Joe resale timeshare buyer. IMO


Terry

P.S. - I do agree that it is not the intent of Marriott to prop up your resale price, however.

 

[Icarus]

What the brokers should be saying is that they will write up the offer at any price you want, however, the property has ROFR, and Marriott has a history of exercising at x% of developer pricing on some, but not all sales at this property.

Anything else is not accurate, and they risk losing their brokers license if they do that.

Also, this does nothing for sales that occur outside those brokers.

-David

 

[Pit]

The trouble with ROFR from a seller's point of view, is that it results in fewer buyers in the market, leading to fewer offers and longer times to sell. Many here argue that ROFR causes buyers to increase their offer, citing examples of people who overpaid for fear of ROFR. But, there are many more examples on resale sites of sellers dropping their price well below the supposed ROFR support level or waiting 1-2 years to attract a buyer. Many knowlegdeable, would-be buyers stay out or drop out of the market because of ROFR. Also, the idea that the developer adds to demand by exercising ROFR is incorrect, because the developer is just flipping the units.

A quality, well managed resort in a desirable location are the requirements for high resale values, not ROFR.

- ROFR is not a prerequisite for high resale value. Westin (mandatory) resorts retain high resale values, despite the fact that Westin does not invoke ROFR.
- Resale prices for Red season weeks at MDSV-I (no ROFR) are thousands higher than at MDSV-II (with ROFR). ROFR is not supporting the value of those MDSV-II units.
- Resale prices at MSW have not increased (actually appear to have decreased) since Marriott instituted ROFR at this previously non-ROFR resort. ROFR has done nothing to increase resale values.

Put yourself in the developer's shoes. Why would a developer waive ROFR ?

1. There is insufficient buyer demand to quickly flip the unit.
2. Developer inventory is already at or above the desired level.
3. The unit is overpriced.

As a buyer, you don't want to pass ROFR because of # 3.

 

[BocaBum99]

Put yourself into the shoes of a typical timeshare wannabe owner that does NOT spend hours reading and writing about timeshares on the internet. Now, suppose you (the not knowing much about timeshares you) call Stroman Realty, GMAC Realty, Holiday Resales, or even Seth Nock looking to buy a timeshare. You want to buy Marriott at some resort like NCV, so you ask how much this resort sells for on the resale market.

The agent says, "The developer price is $33K, but I can probably get you into one for about 60% of that if your lucky." You ask, "Why not 50% or even 40%." The agent responds, "Anything less than 60% and Marriott will take the unit away because it has Right Of First Refusl. If you want to own a prime Marriott property like Newport Coast, this is what you will have to pay." You look at your wife for a minute, shrug your shoulders and then say, "How long will it take to write up the offer?" Agent, "I'll have it all written up for you tomorrow sir." You hang up the phone and hug your wife because you are sooo happy.

I can tell you that I have read this exact expression of words before from people like Seth and would have to suspect that experienced timesahare resellers nationwide utter the similar words. Consequently, I personally don't see how ROFR can do anything but help prop up the price of a typical Marriott. Remember we are talking about the typical Joe resale timeshare buyer. IMO


Terry

P.S. - I do agree that it is not the intent of Marriott to prop up your resale price, however.

If a broker used the words you quoted, they would be misrepresenting the situation and could be fined for misrepresentation. A good broker will only state facts. What you are stating is speculation.

The broker doesn't really care if Marriott exercises ROFR, they get paid either way.

 

[hotcoffee]

I cannot imagine why I am getting myself involved in this ROFR debate. I guess I'm in the mood to inject my 2 cents into the discussion.

I, for one, do that think that the bigwigs at Marriott care beans about me as an individual owner. They might care about all of their owners collectively, however, because Marriott Corporation is a business that depends upon owners spending money on and/or at Marriott timeshare resorts. What Marriott does, it does for business reasons. If things got so bad economically that no one were buying timeshares, I doubt that Marriott would exercise ROFR at all. After all, why would they want to lose a MF to add another unit to their inventory that they cannot sell?

They certainly ARE NOT trying to prop up prices by exercising ROFR on a given unit. They certainly ARE trying to exercise a business decision because they decided they can make a nice profit by grabbing the unit and reselling it themselves.

So, while it is possible that, when timeshares are selling well, ROFR might result in slightly higher resale prices due to real estate companies suggesting pricing above what they think will be the ROFR cutoff, most of the time ROFR will make no difference at all. The market will determine the resale price because the buyer is going to pay the lowest price he can for the unit he wants, and, of course, the seller is going to ask for the highest price he thinks he can sell his unit for (regardless of who buys it). In the final analysis, a buyer is not going to offer more than he thinks the unit is worth or what he thinks he can afford. If he knows about Marriott's ROFR policy and knows ahead of time what the ROFR cutoff is, whether he ups his offer will depend upon whether he thinks the unit is worth the extra money and whether he can afford it. Otherwise, he will just pass on that particular unit.

 

[tombo]

Shux...show me one ROFR timeshare that sells for $1 on eBay like many of the non-ROFR timeshares sell for (and some do not even reach the $1 reserve) everyday.

I personally was ROFR'd on a 2 bed room 2 bath Westgate Smokey Mountains in Gatlinburg which I purchased for $1 plus closing costs. The owner wanted out so bad that they were going to give it to me for free, but I said that I think you have to actually list a selling price to close, so I said let's do the sale for $1. I was mad at the time when Westgate stold it from me using ROFR, but with all the things I have read about Westgate here since then I have come to feel that it was a blessing in disguise.

 

[thinze3]

If a broker used the words you quoted, they would be misrepresenting the situation and could be fined for misrepresentation. A good broker will only state facts. What you are stating is speculation.

The broker doesn't really care if Marriott exercises ROFR, they get paid either way.

Misrepresenation or experience??

I am not stating that these words were quoted in a misrepresentative way, but that salespeople in the know, express, and have expressed, their knowlegde of the ROFR situation buy telling you up front what will and what won't pass ROFR based on his/her recent history.

The last conversation similar to this I had was about a year ago when I called an experienced salesperson about KoOlina. The salesperson told me that Marriott was buying back anything under $22K for mountainview and a few thousand more for OV. Obviously there was nothing wrong with that conversation. Just an experienced salesperson trying to help me get into a KoOlina unit.

It was also a case where Marriott's ROFR was unintentionaly helping to prop up resale prices.

Terry

 

[AwayWeGo]

WestGate Nuisance Fees Tacked On ?

I personally was ROFR'd on a 2 bed room 2 bath Westgate Smokey Mountains in Gatlinburg which I purchased for $1 plus closing costs. The owner wanted out so bad that they were going to give it to me for free, but I said that I think you have to actually list a selling price to close, so I said let's do the sale for $1. I was mad at the time when Westgate stold it from me using ROFR, but with all the things I have read about Westgate here since then I have come to feel that it was a blessing in disguise.

Did WestGate charge the seller their customary sales commission ?

Or a ROFR-administration fee ?

Or both ?

From what I read here at TUG-BBS, those WestGate timeshare folks can get you both coming & going.

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

 

[tombo]

Did WestGate charge the seller their customary sales commission ?

Or a ROFR-administration fee ?

Or both ?

From what I read here at TUG-BBS, those WestGate timeshare folks can get you both coming & going.

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

I am not sure whether Westgate got them coming and going or not. I met them on an exchange to Gatlinburg and they had nothing but bad things to say about Westgate. They said they were so disgusted with not being able to reserve the weeks they were promised they could reserve when they bought that they put it up for sale. They had it for sale for over a year starting at $12,000, dropping to $9000, and finally at $3000 with no offers. They said they would rather give it away than pay one more year's MF's. I got their phone numbers, e-mails address, etc and said I will buy it for $1. When the closing company contacted Westgate they said they were going to ROFR the week. The owners were madder than me when they found out that westgate was getting the week because they had offered to give it back to Westgate for $1000 and Westgate said they didn't buy weeks back from owners. That was the last I heard from them so I don't know if Westgate cherged them to sell or not.

The good part of that story is that a woman who worked for me had made a bad mistake and bought a week at the same resort. Her and her elderly mother went in half and still owed about $9000 on their week. They couldn't find a buyer to get them out and were hurting financially making payments. I told them how they could could make ROFR work for them. They said if they could get a couple of thousand for the week they could come up with enough cash to pay it off. They submitted an imaginary $3000 offer from a friend to Westgate and it was ROFR'd getting them out of a week they couldn't find a buyer for. They wish they had gone higher than $3000 in hindsight on the fake offer, but $3000 was a price they had advertised their week for for months with no offers. They did have to pay some fees, but they were so glad to be done with Westgate that I never found out how much they had to pay.

If you can't sell your Marriott do the same thing and you will actually make ROFR work for you.

 

[cp73]

Brokers and ROFR

What the brokers should be saying is that they will write up the offer at any price you want, however, the property has ROFR, and Marriott has a history of exercising at x% of developer pricing on some, but not all sales at this property.
Anything else is not accurate, and they risk losing their brokers license if they do that.
Also, this does nothing for sales that occur outside those brokers.
-David

I assume the broker gets his commission as long as the sale goes through? Therefore they should be indifferent, if not happier, when Marriott exercises their ROFR. If they do exercise it they can then direct the would be purchaser to another unit and make another sale...Is this correct?

 

[tombo]

Timeshare brokers are timeshare salesman. They will say things true or not to try and get the highest price they can to make more commission. However I don't think that most people don't believe the sales lines and I doubt that most people will raise their offer to what the salesman suggests might pass ROFR. I wish I could be the salesman selling a timeshare, house, car, or any other high ticket item to a customer who would raise their offer on my suggestion. All I would have to say is that the current ROFR is $2000 more than the price the seller was asking (Marriott has no set ROFR level and they only ROFR when they need inventory), the buyer of the house would need to offer $5000 more than the seller's asking price because the neighborhood developer might buy it back for more, or that the car you are looking at needs a higher offer than the sticker price because the manufacturer is outbidding most buyers on their vehicles. If there were a lot of those buyers walking around, there would be a fortune to be made. I think those type of buyers are few and far between.

 

[Icarus]

I told them we could make ROFR work for them.

You might want to amend your post and delete the part where you admit to being at least an accessory to fraud.

If you can't sell your Marriott do the same thing and you will actually make ROFR work for you.

Yeah, right. I certainly hope that most people here would not do what you suggest.

-David

 

[thinze3]

.....We submitted a... $3000 offer from a friend....

That's about as bad as having a friend bid up an eBay item.

Terry

.

 

[Icarus]

That's about as bad as having a friend bid up an eBay item.

Terry

.

Which is also fraud.

-David

 

[tombo]

You might want to amend your post and delete the part where you admit to being at least an accessory to fraud.



Yeah, right. I certainly hope that most people here would not do what you suggest.

-David

You are right, I mistyped. They submitted the offer to Westgate because I didn't own any part of their week or make the offer, I simply mentioned that it might work in theory. Is that better?

After the lies they allegedly told those 2 widowed women to get them to buy, I don't feel one bit sorry that Wastgate might have been induced into ROFR'ing a week that they otherwise wouldn't have rofr'd. The women couldn't reserve a week they could use for 2 years in a row since they were sold a low season week for $12,000 even though they were promised tons of availability over the Thanksgiving and Christmas holidays. In fact Wastegate got out easy. They received $12,000 for a week which the owners only stayed in one time in 3 years. Then Wastegate bought it back for $3000 to sell to the next victim for another $9000 in gross profit. The only sympathy I have is for those poor women, one of who is on a fixed income and the other who makes very little.

 

[Icarus]

You are right, I mistyped. They submitted the offer to Westgate because I didn't own any part of their week or make the offer, I simply mentioned that it might work in theory. Is that better?

After the lies they allegedly told those 2 widowed women to get them to buy, I don't feel one bit sorry that Wastgate might have been induced into ROFR'ing a week that they otherwise wouldn't have rofr'd.

It's still fraud, no matter what the salesman did or said or how the company behaved. If you don't mind admitting to being part of it in a public forum, that's ok by me.

We probably shouldn't get into an ethical debate here, so I'll leave it at that.

-David

 

[tombo]

It's still fraud, no matter what the salesman did or said or how the company behaved. If you don't mind admitting to being part of it in a public forum, that's ok by me.

We probably shouldn't get into an ethical debate here, so I'll leave it at that.

-David

This is a debate I feel sure I would lose and I agree to not debate it here. However, right or wrong, I am glad those women got a little revenge and a small bit of satisfaction.

 

[BocaBum99]

Timeshare brokers are timeshare salesman. They will say things true or not to try and get the highest price they can to make more commission. However I don't think that most people don't believe the sales lines and I doubt that most people will raise their offer to what the salesman suggests might pass ROFR. I wish I could be the salesman selling a timeshare, house, car, or any other high ticket item to a customer who would raise their offer on my suggestion. All I would have to say is that the current ROFR is $2000 more than the price the seller was asking (Marriott has no set ROFR level and they only ROFR when they need inventory), the buyer of the house would need to offer $5000 more than the seller's asking price because the neighborhood developer might buy it back for more, or that the car you are looking at needs a higher offer than the sticker price because the manufacturer is outbidding most buyers on their vehicles. If there were a lot of those buyers walking around, there would be a fortune to be made. I think those type of buyers are few and far between.

I had to come back to this thread since this is the official ROFR debate thread.

Your description of timeshare brokers motives are not accurate. I know because I am a licensed real estate broker selling timeshares. First of all, I don't lie to make a sale. Most brokers I know don't lie either. And, you don't necessarily maximize commission by trying to get the highest price. In fact, just the opposite is true. With ROFR, you maximize commission by getting the buyers and sellers to agree to the LOWEST price possible. Think about it. I'll leave it at that.

 

[Dave M]

With ROFR, you maximize commission by getting the buyers and sellers to agree to the LOWEST price possible. Think about it.

I'm a real estate novice. I don't get it.

Can you explain? Via PM, if you don't want to do it here?

 

[BocaBum99]

I'm a real estate novice. I don't get it.

Can you explain? Via PM, if you don't want to do it here?

PM sent. I think that will clarify everything. Lightbulb on.

 

[Icarus]

Does the answer include multiple transactions?

-David

 

[m61376]

I assume the broker gets his commission as long as the sale goes through? Therefore they should be indifferent, if not happier, when Marriott exercises their ROFR. If they do exercise it they can then direct the would be purchaser to another unit and make another sale...Is this correct?

Succinctly explained.

Not to reopen the long-standing debate, but doesn't the current situation underline the effect of ROFR on pricing? I suppose one can argue that these bargain basement prices from desperate sellers would exist anyway, with Marriott otherwise becoming the richer for it rather than buyers, but every other post from buyers today looking to grab a deal is that ROFR isn't being exercised.

And, when I e-mailed a well respected broker here on Tug about a listing and tried to negotiate pricing down to what similar units have sold for on Ebay, he countered that they would likely be bought back by Marriott (according to him, Marriott is still buying back low priced weeks, although that's not what most Tuggers here are reporting); thus, he was arguing ROFR to bolster prices.

Desperate sellers will sell for what they can get, but I do believe the market is diving partially because buyers are able to benefit from seller's desperation at the present time. It becomes a domino effect; if someone paid "x" dollars for a unit, I won't pay "x+1."

Something to at least consider....

 

[dioxide45]

Does the answer include multiple transactions?

-David

I don't get it either