I have done three upgrades: one was a bad deal in retrospect, the other was a decent one (maybe even good). It all depends on what HGVC is offering to you, and what you are able to get from them in return.
When you do an upgrade, you should get 100% credit for what was paid to the developer originally for the property you are trading in. So in that way, it is a good way to get rid of a property you might no longer want. Also worth noting is that HGVC has offered to upgrade a unit purchased at resale (Anderson Club), giving me full credit for the original developer price paid by the original purchaser (which was much more than I paid at resale). Plus you can get a good number of bonus points. As mentioned, you will need to buy a MORE expensive unit by about $30K delta in order for HGVC to agree to any upgrade, so the game is that you want to trade in a more expensive property that you don't want, for one you do, and try to keep the new money you have to pay as close to 30K as possible. You can also get other benefits on the upgrade - see below examples.
A couple of examples from my own experience:
Deal #1 (bad): Upgraded a one bedroom at Sunrise Lodge ("equity" credit of around $30K), to a 3 bedroom + 1 bedroom premium platinum for around $95K. 40,000 bonus points. Moved my Anderson Club resale unit (that was in its own HGVC account so was a hassle to deal with) into my consolidated HGVC elite account making point management and reservations easier. Enabled me to achieve Elite status. I also used the 40K bonus points over 2 years for 6 extra weeks of vacation.
Deal #2 (good, I think): Upgraded the 3 Bedroom premier platinum at Sunrise Lodge (equity credit of around 65K) to a 2 bedroom penthouse unit / pool platinum season unit (19K annual points) at the new Barbados property, with a net payment of 44K. Received 20,000 bonus points, plus converted my non-HGVC Grand Pacific Palisades unit (bought resale, not eligible for HGVC) into an HGVC unit and moved into my elite HGVC account.
I won't dissect the first deal, which in retrospect I think was not worth it (though the 3 bedroom units platinum units are not easy to find, so what they are worth really depends on timing of when you are trying to sell; Watching market over past few years, I have seen the Sunrise 3 bedroom premier platinum units go for 40-50K, and also seen sellers at 15K; but they rarely come up so market is hard to judge).
Deal #2 I am pretty happy with. If I had sold the 3 bedroom Sunrise property, I would have received somewhere between 15K and 44K resale depending on how long a was willing to wait it out for top dollar. Renting the 3 bedroom has turned out to be difficult (the one bedroom rents every year I don't use it, on the other hand), and our prior upgrade had combined the 1+3 bedroom into a single contract, which would have made resale very difficult. I figured I might get 35K if I gave it 6 months for both units. I could have purchased a prime fixed week unit the Barbados units direct from The Crane instead of HGVC, so there are some good pricing metrics. A similar 2 bedroom pool/penthouse Crane residence around Christmas or spring break weeks would have run $55K - 90K resale, but would have been fixed week and would not be included in the HGVC system.
Comparing purchase financial aspects on Deal #2:
Direct purchase with 3 bedroom trade in from Sunrise (retaining 1 bedroom for later sale and/or continued rental): net payment $44K
vs.
Sell Sunrise at resale (both units together) for around $35K (hopefully) and purchase comparable resale at around $70K midpoint of current offerings: net payment $35K and at least several months to a year before I could get the price I want for Sunrise (if at all).
So on purchase price alone, I might have done slightly better selling and buying resale. But, by going through HGVC I got a number of concessions that made the extra $9K worth it (in this particular case): (i) I still have the 1 bedroom at Sunrise I can now sell unencumbered from the 3 Bedroom, or I can keep renting it out over the cost of MFs; (ii) related, there was no way I could separate the Sunrise units since they were deeded in a single contract (big mistake I made in that first upgrade), making it very questionable whether I could ever get any real resale value for the 1 bedroom that would be tacked on to the 3 bedroom in a resale - in the upgrade, HGVC agreed to separate the deeds for me; (iii) slight reduction in MF/point (and Sunrise has been increasing, whereas Barbados is brand new so hopefully will be fixed for a while); (iv) 20K bonus points (not that I value these at much, but at least a few grand); (v) moving my Grand Pacific Palisades unit into the HGVC system and my elite account, which was impossible without the upgrade as my particular resale unit was not grandfathered in to the HGVC management deal at GPP.
So the moral to my story is that you should at least evaluate the upgrade offer that HGVC is giving you, and ask for anything that you want "fixed" as part of the upgrade. You **might** be able to get a good deal, but you could also get taken so be firm if what they offer isn't good enough then walk away.
