The Marriott ROFR Debate: helpful to sellers or not?

[BocaBum99]

So now I'm curious. How do you feel knowing you went ahead and played the game and now, today, if you wanted to sell Marriott has taken the ball and gone home leaving you with a week you paid an inflated price for due to their games? What good is a price prop if it isn't there when actually needed? Hope you REALLY wanted that week as you paid too much and now aren't likely to ever have a chance of recovering it based on misrepresentations from Marriott and resellers. If you did just want that week and didn't care what you paid or what the future value might be (a perfectly legitimate approach to a personal decision about value) then you did OK.

I also agree with your sentiment in this post. What you seem to be acknowledging is that prices are indeed propped up by ROFR because when they stop it prices drop. Therefore the buyer is hurt by paying an artificially higher price. I completely agree with that assertion. That is the single reason I have never bought a platinum Marriott up until today because I knew I could never get it at a price that I was willing to pay since Marriott would grab it.

There are two follow on points that must also be made.

First, when ROFR is removed, that makes it a buying opportunity for those who were latent buyers who dropped out when ROFR was being exercised. This explains my personal change in opinion about whether or not I should buy a platinum Marriott. If I am ever going to pick up a platinum Marriott, this is the time to do it.

Second, just because I am not willing to purchase a Marriott at a level above ROFR, it does NOT mean that others do not still find value in a Marriott timeshare at that price. It just means their willingness to pay for a platinum Marriott timeshare is higher than mine is. That's what makes a market. People who know the situation and still buy. They are not wrong. They are just different.

A supply demand curve is by definition a chart of the number of market participants at every price point who are willing to buy a product at that price point mapped against the number of market participants who are willing to sell the same product at that price point. Here is what a supply demand curve looks like:

Notice that there is a point at which supply equals demand in terms of number of participants. It is at that quantity that the number of sellers and buyers equal and the market can clear. Can you see how adding demand will shift up the cross over point of these curves? That is how increasing demand increases prices. When ROFR is exercised, it distorts these curves.

The problem in this discussion is that some on this board believe that if a person is willing to pay $5000 for a product that they are NOT willing to pay $6000. That is NOT true. All participants who are willing to accept $7000 as a purchase price are also willing to accept a price of $5000 or $4000. That is why the curve is always increasing or decreasing. Same is true of sellers. All sellers who are willing to accept $5000 will also be willing to accept $6000 in a sale. That is the point that is lost when discussing supply and demand and the clearing of markets.

 

[Stefa]

I agree with this statement and personally do not know anyone who would walk away simply because a developer ROFR'd a unit from them. The buyer will try again on another unit, most likely with a slightly higher price. Before long experienced sellers like Seth would be advising buyers on ROFR price points keeping many buyers from making lowball offers.

Terry

I actually did walk away simply because Marriott ROFRd my resale purchase. I only wanted the timeshare if I could get it for my lowball price. Had I really wanted that resort/season that badly, I might have tried again at a higher price.

And I'm not sure Seth is the best example because I'd bet he gets a significant amount of business from TUG (I could be wrong) and therefore he would be representing the kinds of buyers who would make the lowball offers where ROFR would come into play. I'm not suggesting that buyers don't raise there price because of the advice of Seth or another broker, I'm nust not sure how often the ROFR really came into play before Marriott stopped exercising. Obviously it's a big deal here at TUG, but I wonder what percentage of resales were really impacted by ROFR. (I know there is no way to know this.)

 

[AwayWeGo]

No, No. It's The Other Way Round.

What you seem to be acknowledging is that prices are indeed propped up by ROFR because when they stop it prices drop.

Just the opposite -- when the prices drop, the timeshare companies quit exercising ROFR.

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

 

[grupp]

When ROFR is exercised, it distorts these curves.

You may want to brush up on your Econ basics. The ROFR does nothing to move the curves, but would move the supply and demand ALONG the curves.

For example, if you have a price floor (which could be a ROFR) above the market price, supply will exceed demand. For those who are able to sell at that price, there will be a benefit of a higher selling price. For those who are unable to sell due to lack of demand, they are at a disadvantage.

So does a ROFR help good for sellers or not? I quess it depends on each particular circumstance.

There may have been a shift in the demand curve moving it down as depicted in your graphic, but this has to do with other things occurring in today's economy and nothing to do with ROFR

Gary

 

[timeos2]

Are you serious? So, you are saying that Seth Nock is a criminal? He is the single largest Marriott broker I know. Please, I defy you to find ONE person out of the THOUSANDS who believes that Seth cheated them. Hundreds of them post on this board.

I ask you to retract your slanderous remarks.

Seth and many other Marriott resale brokers provide a value added service to potential buyers to help them navigate through the ROFR process. And, they can often times get them deals better than they can get for themselves. This is the OVERWHELMING response you will get from resale broker clients.

Most resale buyers who use a broker and thankful that they found the resale broker who saved them thousands of dollars off of the developer price for virtually the same product.

I said nothing about Seth specifically (and he does hold a sterling reputation here) or anything about criminal. I have never spoken to him or tried to purchase anything from his services.

I do have a serious problem with anyone who would give advice to pay more for anything they stand to profit from in the guise of "helping". If in fact Seth or anyone else does that without serious, fully detailed qualifications as to the reasoning then that is someone I would feel is taking unfair advantage of a client/customer. Again I don't know how Seth conducts business and given your description of the satisfied clients I hope it is clearly stated what he is recommending and why. If a fully informed buyer decides based on truthful information to make a bid for a higher amount then there is no issue. If the "help" is the typical timeshare presentation type of self-serving "facts" designed to get the sale then I would have serious problems with it.

I have nothing to retract.

 

[thinze3]

You had one buyer and with Marriott you have two buyers.
And Marriott can be a REALLY BIG BUYER when exercising ROFR.
Demand goes up. It really is that simple.

Terry

P.S. - John, I think a salesman telling someone what Marriott has been doing recently is a service to his clients.

 

[BocaBum99]

You may want to brush up on your Econ basics. The ROFR does nothing to move the curves, but would move the supply and demand ALONG the curves.

For example, if you have a price floor (which could be a ROFR) above the market price, supply will exceed demand. For those who are able to sell at that price, there will be a benefit of a higher selling price. For those who are unable to sell due to lack of demand, they are at a disadvantage.

So does a ROFR help good for sellers or not? I quesss it depends on each particular circumstance.

Gary

Perhaps I was too ambiguous and unclear in my previous post. Let me fix that. You are correct that if you measure aggregate demand with Marriott exercising ROFR that that aggregate demand is represented by a single demand curve. I was trying to describe that as D2 in the above chart. Given that demand curve, there is an equilibrium point which represents the market price and any demand below a certain price point (the ROFR level) removes the buyers from the market along that curve. You can actually theoretically measure how many participants there are if you get the demand curve right. However, that is NOT what I am trying to describe. I was sloppy in my description by discussing two different topics together in a convoluted way. Let me try to clarify it.

First, here is the description of the shift in the demand curve I posted above:

When consumers increase the quantity demanded at a given price, it is referred to as an increase in demand. Increased demand can be represented on the graph as the curve being shifted outward. At each price point, a greater quantity is demanded, as from the initial curve D1 to the new curve D2. More people wanting coffee is an example. In the diagram, this raises the equilibrium price from P1 to the higher P2. This raises the equilibrium quantity from Q1 to the higher Q2. A movement along the curve is described as a "change in the quantity demanded" to distinguish it from a "change in demand," that is, a shift of the curve. In the example above, there has been an increase in demand which has caused an increase in (equilibrium) quantity. The increase in demand could also come from changing tastes and fads, incomes, complementary and substitute price changes, market expectations, and number of buyers. This would cause the entire demand curve to shift changing the equilibrium price and quantity.

If the demand decreases, then the opposite happens: an inward shift of the curve. If the demand starts at D2, and decreases to D1, the price will decrease, and the quantity will decrease. This is an effect of demand changing. The quantity supplied at each price is the same as before the demand shift (at both Q1 and Q2). The equilibrium quantity, price and demand are different. At each point, a greater amount is demanded (when there is a shift from D1 to D2).

What I should have said to be more clear is that Marriott entering the market with ROFR shifts the demand curve which is an artificial market distortion. One demand curve describes the aggregrate demand for a given set of circumstances and environmental conditions. In the example I cite, D1 is the curve when Marriott is NOT exercising ROFR. The aggregate demand is lower.

When the market conditions change and Marriott enters in as a market participant, aggregate demand increases and the curve shifts to the right because of their entry into the market of total demand represented by D2. What I am saying is that everything else in the market is the same. The only difference is whether or not Marriott is exercising ROFR.

The demand curve shifts due to the artificially increased demand from Marriott. The shift in the curve is the market distortion I am discussing. It results in a different equilibrium point. The distortion in the demand curve will determine whether or not the resale prices will go up or down. If the curve simply stays the same and shifts to the right, then prices wil l increase. If the demand curve steepens, equilibrium price can go down. In both cases, the resulting demand curve is a distortion from the original which is where the real market demand is represented.

In addition, it is worth noting that if the increased demand by Marriott is not large enough to change materially the demand curve, then ROFR truly does not impact prices. I believe this is what many on this board believe. They believe it adds demand, but not enough to change the curve. I used to be in the camp until I saw it change with my own eyes.

Moreover, this entire discussion is only addressing the demand curve. If the supply curve shifts, then that will also impact market price. Probably one of the biggest shifts in the supply curve was introduced by the advent of the PCC. Now, foreclosures will also add supply and therefore shift the supply curve. I believe this dramatically increased supply has severely limited the impact ROFR in raising prices. The question is whether or not environmental conditions change in the future back to its more normal state or if it permanently stays where it is now or gets worse.

 

[tombo]

You may want to brush up on your Econ basics. The ROFR does nothing to move the curves, but would move the supply and demand ALONG the curves.

For example, if you have a price floor (which could be a ROFR) above the market price, supply will exceed demand. For those who are able to sell at that price, there will be a benefit of a higher selling price. For those who are unable to sell due to lack of demand, they are at a disadvantage.

So does a ROFR help good for sellers or not? I quesss it depends on each particular circumstance.

Gary

ROFR doesn't set a floor price as it is a moving price exercised sporadically. If ROFR did set a floor price it would be good for all owners and it would actually prop up prices. As you said it can move supply and demand along the curves.

I got ROFR'd once and the seller got what he agreed to sell it to me for from Marriott. I will never bid on any resort with ROFR again. Any seller with a week he needs to sell who is willing to take a price I would pay has lost a buyer (me). Any seller selling on e-bay has one less bidder raising the auction price on the week he has for sale. Any seller who wants to sell their week for a price that is reasonable in todays market has reason to hate ROFR because of the loss of potential buyers like Stef and myself it has alienated. I have purchased over 15 weeks since I swore off ROFR resorts, and at least 5 of them would have been Marriott except for ROFR. If a developer or other buyer beats me in bidding on an auction or by offering the buyer more than I will pay, then they deserve the week. If Developers lawyer me out of a week I rightfully purchased by using ROFR, then they can have that week and all others that are for sale at any price.

There are the brokers and sellers who get more money using ROFR. The customer offers them $5000 for example and they say I will take that but I think it will take $6000 to beat ROFR. Some people fall for that just like some people fall for the line that there are 2 buyers looking at that used car you want so you better buy it now. Many fall for the my boss won't take that for that car, but for a little more you can get it. Then there is always the developers cry of this price is only good today. Some would call that tactic salesmanship, some would call it a lie, some would call it fraud. I guess it just depends on your morals and point of view.

Some people are suckers, some are simply too trusting, but the only way ROFR increases prices is by being used as a bargaining tool (ie threat) by sellers who actually have no idea if a week will be ROFR'd, or at what price ROFR would be exercised. Only the resorts know if, when, where, or at what price they will ROFR. As many have said here just the threat of ROFR raises prices... Thank goodness I don't have to threaten ROFR to the uneducated to make a living or sell my weeks.

 

[m61376]

So now I'm curious. How do you feel knowing you went ahead and played the game and now, today, if you wanted to sell Marriott has taken the ball and gone home leaving you with a week you paid an inflated price for due to their games? What good is a price prop if it isn't there when actually needed? Hope you REALLY wanted that week as you paid too much and now aren't likely to ever have a chance of recovering it based on misrepresentations from Marriott and resellers. If you did just want that week and didn't care what you paid or what the future value might be (a perfectly legitimate approach to a personal decision about value) then you did OK.

First of all, since you don't know me, let me tell you that I am the consummate shopper, and generally buy great stuff at the lowest price possible. My friends come to me for advice and marvel at my shopping expertise, so I am certainly no fool.

Secondly, you are missing my point entirely. Two years ago, when I tried to buy the first unit, I was well aware that it was priced several thousand dollars lower than anything else. I was, in all honesty, probably taking advantage of either someone's lack of knowledge of the market or, more likely, someone who needed the money for whatever reason and wanted to sell (not something to be proud about, but I was taking advantage of the best deal I could find). When Marriott nabbed it, I did find another good buy, but still more money.

At the time of purchase most other brokers told me I would never find a unit at the price I ultimately paid- so I did NOT overpay- it just wasn't the steal that the first unit was. ROFR, in this case, prevented a bargain basement price from becoming the norm.

As for your other question- as how do I feel in today's market- interesting question and my answer will probably shock you. If I had known what the market would become, the shopper in me would have waited. HOWEVER- the first year I took two wonderful trips with my parents, who were thankfully healthy and fine and I thought they'd be around forever. My Dad died a year ago unexpectedly and, well, to sound corny, those memories are priceless. So, I am very happy that I didn't have a crystal ball and bought when I did, and I will never regret that decision. After all, isn't that the whole purpose of timeshare purchases?

 

[m61376]

So it should be "No informed buyer will willingly offer $6000". Maybe one that is getting bad advice or gets caught up in the auction mentality of "I gotta win" but no average, knowledgeable buyer is going to offer more than the going rate for any product. The fact that some do on a rare occasion doesn't disprove the theory but goes to show people can and are fooled into bad purchases. Never done that? We all have. Go back to the sticker price car buyer or the rack rate hotel guest. But hopefully you learn and don't make the mistake a second time (or a second, higher bid on a ROFR property).

As I commented above, no one who knows me would ever characterize me as an uninformed buyer on anything. I am the consummate shopper. And, as I said, I got a really good buy at the time, just not a fire sale price.

And, just to set the record straight, I have never paid either sticker price for a car or a hotel rack rate and do not believe that is, in any respect, analogous to upping a price on a ROFR, as long as the second price is within market parameters.

 

[grupp]

What I should have said is that it shifts the curves.

I guess we have a fundamental disagreement on whether the ROFR moves along the existing curve or actually moves the curves. I would argue (and I believe correctly) that the Marriotts ROFR does nothing to move the curves. They are not actively out seeking properties and only jump into to transactions that are already agreed upon. If they were actively in the Market seeking properties, that would be different story. That would increase demand moving the curve to the right.

I would agree that now or in the near future certainly may be a good time to purchase for several reasons. As you point out the demand curve has certainly moved down due to the current economic situation. (absolutely nothing to do with ROFR). Second, the fact that Marriott is not using their ROFR is an advantage. Not necessarily price wise, but prevents you form wasting your time working out a deal only to have Marriott take it away from you.

If you do a little Econ refresher class, you would most likely agree with me on the demand curves.

Hope you have a Happy New Year.

Gary

 

[timeos2]

The true believers are hoping they are right.

First of all, I think you may be labelling me as an ROFR true believer. That's fine. What I actually am is a scientist. I develop theories based on various economic principles, then I run experiments to test my hypotheses and I accept what I see with my own eyes are the reality instead of the make believe world of what is only in my head. So, technically, this doesn't make me an ROFR true believer. On the othe hand, you simply ignore all of the evidence to the contrary and make blanket statements that are so easy to disprove that you must constantly retract your statements like you will certainly do on this thread regarding criminal behavior of brokers and the existence of at least one person who would try more than once to buy a Marriott. So, the label of true believer is more aptly descriptive of you.

Actually I don't think you are a true believer or you would buy into the system. So far at least you haven't from what I read. Like Bill O'Reily I don't want to hear the theoretical idealism of a controlled experiment - look at the way the real world behaves for your facts. Unless you subscribe to the Perry espoused, twisted "raise the price and they will buy" theory the real world says once a potential buyer sees a low price they are going to limit how much over that price they are willing to spend in most cases. While there may be a case of a sale a few hundred or thousand above the actual market value it is not due to any action of RFOR but of misconstrued credit to that system when supply/demand is the true driver. There are a limited number of truly quality weeks and those will, by nature, sell for more than average. No ROFR required.

The real problem here is removing unrelated factors from the picture. You say ROFR raises the value. I would maintain the specific demand for a week (top value time, name brand or top resort, maybe special view, etc) drives the value up and ROFR is only a detriment to the process. It isn't raising the price, it's another roadblock to a sale. How can you state that the few dollars you credit to ROFR wouldn't have been twice or three times as much if the week was offered unencumbered by ROFR? We all seem to agree there are buyers who refuse to deal with or drop out due to ROFR. Maybe they, if bidding, would raise the value even more. Can't be proved but, again, the real world says that's the case. Every study says when you cut the number of potential buyers- ROFR is a proven method of doing that - you reduce the potential price received.

And of course we tend to view the whole world through the TUG lens. Most buyers / sellers have no clue and thus the uninformed and real world scenarios become the determining factors. And no lab to control the results either.

Obviously this thread will never reach a definitive conclusion as each side has a case and neither can prove it at anything approaching 100% of the time. So I'll put you down for lukewarm support of ROFR as a temporary, artificial price booster with no future guarantees. I go with the avoid ROFR / buy low crowd that sees it as a big negative to all but developers. A few here would be the ROFR true believers at least until they try to actually sell (although human nature being what it is it's unlikely they will admit they were wrong even when the inevitable lower price sale occurs). Too bad we can never really tally which side gets the most actual results.

 

[BocaBum99]

So it should be "No informed buyer will willingly offer $6000". Maybe one that is getting bad advice or gets caught up in the auction mentality of "I gotta win" but no average, knowledgeable buyer is going to offer more than the going rate for any product. The fact that some do on a rare occasion doesn't disprove the theory but goes to show people can and are fooled into bad purchases. Never done that? We all have. Go back to the sticker price car buyer or the rack rate hotel guest. But hopefully you learn and don't make the mistake a second time (or a second, higher bid on a ROFR property).

I think this is a very important point to probe because I think it is the root assumption underlying your whole argument. And, I believe that assumption can be proven to be false.

As I mentioned above, there are buyers who would willingly pay $7000 or more for a Marriott timeshare in question who are fully educated and apprised of the pros and cons of that price point and would not at all be upset if their lowball offer of $5000 were bought back by Marriott. Many of those buyers think that they took a shot and lost. No skin off their back. They just find another deal. If a broker is involved, that is very easy to do. Next time, they would be willing to offer $6000 for it. This doesn't violate any trust or confidence and it's a decision that can be made legitimately by any potential buyer. To them, for whatever reason, they believe it is worth $7000 to them. So, if they bid and get it for $6000, they can legitimately be happy. Your paradigm seems to preclude an intelligent buyer from being in this situation.

You even use the example that it suggests that if the buyer were intelligent and educated that only an unscrupulous broker/agent would bamboozle that buyer to make the purchase. I used Seth Nock as an example because I know that you and I both agree that he is a reputable broker who sells Marriotts. That is a known fact. Your theory is if ROFR is being exercised, then it by definition is a bad decision to purchase above that price. The only logical conclusion a person can make from your statement is that then Seth Nock must be acting unethically. The piece of information that absolves brokers like Seth is that buyers have different willingness to pay for various products. A price for one buyer is not necessarily the same price point for another one. And, if a person is willing to pay a higher price, that is their freedom to do so. And, it happens all the time without any ethics issues.

The reason for bringing up the supply/demand curves is to show that a price point is nothing more than an equilibrium point where supply and demand is equal, but actual prices paid vary dramatically. This curve represents a distirbution of willingness to buy and willingness to sell by all buyers and sellers. That distribution has a mean or average amount and a standard deviation that is actually quite high indicating a very chaotic market.

So, I believe your underlying assumption that no educated buyer with full disclosure would ever make a $6000 offer after losing a unit for $5000 due to ROFR is simply not true and isn't even consistent with the experiences of many buyers on this message board.

 

[m61376]

Boca- Kudos for a great explanation!

 

[BocaBum99]

I would maintain the specific demand for a week (top value time, name brand or top resort, maybe special view, etc) drives the value up and ROFR is only a detriment to the process

I think you will agree with me that this is the key point of disagreement between those who believe that ROFR effects resale prices vs those who don't.

In summary, you believe that the demand curve (and therefore aggregate demand) for Marriott timeshares is about the same whether or not Marriott exercises ROFR. In other words, it doesn't matter how much Marriott exercises, it does not materially impact aggregrate demand or aggregate supply. If this is true, then your theory is correct. ROFR has no impact on resale prices since the equilibrium point does not change due to ROFR. Other things such as PCCs, sellers dumping weeks, buyers getting religion for timeshare, and other factors have such an overwhelming impact on overall supply and demand that ROFR should merely a considered a footnote in the discussion. ROFR only steals units from buyers who would have otherwise got them had it not been in effect. Does this adequately describe your view?

I (and others) believe that the aggregate resale demand is small enough that one large player like Marriott can materially effect the demand curve. Therefore, the demand curve shifts and the resale price goes up or down based on the actions of a single market participant.

I am fine with this difference in belief systems. Time will tell who is right.

I just ask you to concede the point that it MAY be possible for the buying and selling actions of a single player is large enough that the underlying demand curve can shift and market price can change based on those actions.

If you can agree to that, I think we have found the crux of the disagreement.

 

[BocaBum99]

I guess we have a fundamental disagreement on whether the ROFR moves along the existing curve or actually moves the curves. I would argue (and I believe correctly) that the Marriotts ROFR does nothing to move the curves.
Gary

Gary,

As I mentioned to John, I believe this now to be the crux of the difference in opinions about ROFR. I believe there are circumstances that ROFR buying is large enough to shift the demand curve and therefore impact the equilibrium price.

You and John don't agree. That's fine. I used to believe that, too. For a thinly traded product like a small Marriott resort, I believe the entire demand curve can be changed by one large player especially since the overwhelming
number of sales has been by the developer. At many resorts, 90% or more of all sales (developer sales plus resales) are made by the developer If Marriott shifts 10% of its buying at these resorts to reclaim resales instead of building new buildings, then it could double the aggregate demand for a given resort by itself. That would have a material effect on price.

So, whether or not you believe ROFR results in a change on a given demand curve or is big enough to shift it depends on your point of view about the market and how big the supply and demand is.

 

[dioxide45]

Are you serious? So, you are saying that Seth Nock is a criminal? He is the single largest Marriott broker I know. Please, I defy you to find ONE person out of the THOUSANDS who believes that Seth cheated them. Hundreds of them post on this board.

I ask you to retract your slanderous remarks.
.

I don't think this is a fair assessment of John's opinion. You mentioned a specific broker by name, not John. So you made an assumption that may not have been true. If anything should be retracted, it should be your post. Slander did not happen in John's posts. I think you owe John an apology.

 

[dioxide45]

Pool

Who is in???

On what date will this thread die?

On what date will some fool (me in this most recent case with this thread) bring it back to life?

 

[dioxide45]

Brokers

Do realize that the person who pays a broker is the seller, from the selling price. So it is the responsibility of the broker to get the best price for their buyer.

 

[BocaBum99]

Do realize that the person who pays a broker is the seller, from the selling price. So it is the responsibility of the broker to get the best price for their buyer.

Actually, there is a whole body of law related to agency. If you are a buyer's agent, you are loyal to the buyer. If you are a seller's agent, you are loyal to the seller. In some states, you can be can a dual agent under certain circumstances. In Florida, the default relationship is called a transaction broker where the agents are loyal to neither the buyer, nor the seller, but to the transaction. And, they owe limited confidentialty to both parties with other responsibilities described in the appropriate disclosures.
This is a topic that most people don't understand well and it would behoove them to study it before entering into any relationship with an agent of any kind.

 

[BocaBum99]

I don't think this is a fair assessment of John's opinion. You mentioned a specific broker by name, not John. So you made an assumption that may not have been true. If anything should be retracted, it should be your post. Slander did not happen in John's posts. I think you owe John an apology.

John and I are friends. We have known each other for years and we have been on the same side of most arguments. I think we just disagree on ROFR and the risks associated with Trusts vs. non-Trust deeds. Well, I guess we also disagree about Interval International. But, we both agree on Disney, points vs. weeks and many other things.

More importantly, we both know Seth Nock. The only reason I used Seth like I did with John is because I knew he knew what I meant by it. And, it was to turn his argument into something real instead of something abstract. The logic of my post is true. If you or John were offended by it, my apologies.

 

[dioxide45]

Actually, there is a whole body of law related to agency. If you are a buyer's agent, you are loyal to the buyer. If you are a seller's agent, you are loyal to the seller. In some states, you can be can a dual agent under certain circumstances. In Florida, the default relationship is called a transaction broker where the agents are loyal to neither the buyer, nor the seller, but to the transaction. And, they owe limited confidentialty to both parties with other responsibilities described in the appropriate disclosures.
This is a topic that most people don't understand well and it would behoove them to study it before entering into any relationship with an agent of any kind.

I stand corrected. Do note though that any brokers paycheck is tied to the purchase price they negotiate with the buyer. So it is in their best interest to drive that price up. There have been specific experiences posed where brokers have told people that their price was too low and would get taken by ROFR. While some brokers may have a lot of experience with ROFR, even the best don't know where the moving target is and they know that the chances of Marriott exercising at any given time are slim.

 

[BocaBum99]

Who is in???

On what date will this thread die?

On what date will some fool (me in this most recent case with this thread) bring it back to life?

It will never end. Just be happy we aren't discussing weeks vs. points against Carolinian. That would be a few hundred point thread. It would have PerryM, John and me all on the same side barely holding our own against Carolinian. We actually need these debates every now and then. They rehash the exact same arguments over and over and it makes the message board interesting again. Most just roll their eyes and ignore it. Others love the debate.

At least we aren't discussing Global Warming. In that discussion, Carolinian and I would be in the same camp. It's fun being on his side. He does all the posting and I just cheer him on. LOL.

 

[BocaBum99]

I stand corrected. Do note though that any brokers paycheck is tied to the purchase price they negotiate with the buyer. So it is in their best interest to drive that price up. There have been specific experiences posed where brokers have told people that their price was too low and would get taken by ROFR. While some brokers may have a lot of experience with ROFR, even the best don't know where the moving target is and they know that the chances of Marriott exercising at any given time are slim.

In theory this is true, but in reality it doesn't work that way. Brokers don't try to drive up the price. We just try to get a meeting of the minds between buyers and sellers. Any transaction is better than no transaction. It's more important to ensure that both parties feel like they are getting a good deal. If they don't, then one can back out later which happens a lot. It is very easy for sellers to back out of deals. If they refuse to sign the warranty deed or the transfer papers, the buyer must sue for performance of the contract and it's just not worth it to do that. It's much easier just to find another deal. And, escrow disputes are painful. So, everyone is just trying to make sure everyone is happy. It's not worth the fight for such small dollars. If we were talking million dollar homes with $75,000 commission checks, then yes. Fight until the bitter end. Problem free escrows is what most brokers want.

Also, the numbers we are talking about are not material. Let's say the commission is 15%. On a $10,000 purchase, that is $1500. If the price is driven up to $12,000, then the commission is $1800. It's not worth risking the $1500 to drive up the price 20% to get $300 extra. It is worth taking $1200 if you could guarantee it would close with no problems.

 

[dioxide45]

If Marriott has made up its mind to purchase all units at that price or below in lieu of spending double that for new construction, that poor "original buyer" will never own that Marriott, now would he.

Terry

I don't think this business model would work for Marriott. There is only a limited supply of resale weeks. Say only 5% of all weeks owned are on the resale market at one time. Less than 5% of those sellers are serious about their asking price. I don't think Marriott could sustain this model very long before it would max out. Also if as you state ROFR drives up prices, then they wouldn't be able to buy them for half of building new, they would quickly be having to ROFR at prices close to developer.

New construction privides profit growth, buying and reselling will only sustain some profits for a period of time before it runs out and is no longer provides a profit base.