DVC Right of First Refusal (ROFR): April ’17 Report
Summary
In the month of April, Disney exercised their right of first refusal (ROFR) on 14 of 220 contracts sold through the DVC Resale Market, representing 6.4% of the contracts sold. This lowers the year-to-date (YTD) buy back rate to 9.6%. April marked the 2nd month in a row for the buy back rate to drop, pushing the YTD buy back rate back to single digits for the first time since January. Despite two straight months of declines, the 2017 buy back rate is still more than 2x that of the 4.4% buy back rate of 2016. In April, 93.6% of contracts were waived by Disney, bringing the YTD waiver rate to 90.4%.
As mentioned in earlier ROFR reports this year (January, February and March) a likely reason for the higher buy back rates so far in 2017 is due to Disney’s $5/pt. increase on all DVC properties in January, and the opportunity to buy back resales with prices at 2 year lows. However, as DVC resale inventory has shrunk significantly since the beginning of 2017, the resale market has seen a steady increase in prices. This increase in prices could possibly be the main contributor in Disney’s buy back rate dropping for two consecutive months. April’s buy back rate was roughly 57% lower than February’s rate and 15% lower than March’s rate.
What is Right of First Refusal?
For those new to the concept of Right of First Refusal, it is the option Disney Vacation Club has to purchase any resale contract after a sales price has been agreed upon, and the contract has been executed. Each contract must be forwarded to DVC for review. DVC may take up to 30 days to review the contract. At their discretion, Disney may step in and purchase the property themselves at the terms agreed upon by the Seller and original Buyer. DVC then becomes the Buyer, and the purchase is complete. Once DVC is the buyer there is not an opportunity to come back with a better offer in hopes of still purchasing the contract.
Resorts Bought Back in 2017
Please refer to the graph below for the total amount of buy backs at each DVC resort for contracts sold through the DVC Resale Market.
Details and Data
While 9 of the 14 contracts bought back in April had strong point availability, meaning the contracts had all or almost of the 2017 points and all points going forward, price remained a factor as well. The remaining 5 of the 14 contracts bought back with low point availability seemed to be targeted due to price. For example, a 320 point Bay Lake Tower was bought back at $106/point, and a Boulder Ridge contract was bought back at $84/point. Both contracts had no points coming until 2018. Surprisingly, 2 Hilton Head contracts were bought back in April as well. While 2 does not sound like a lot, that was double the amount of Hilton Head contracts we saw bought back the entire year of 2016. For a complete list of the buy backs in April, please see the table below.
Resort | $/Point | Pts. on Contract | Price | Closing Costs Paid by | ’17 Dues Paid By | Use Year | Point Availability |
Animal Kingdom | $88 | 160 | $14,080 | Buyer | Buyer | Dec | 33 Pts. ’16 + 160 Pts. ’17 + 160 Pts. ’18 |
Animal Kingdom | $85 | 160 | $13,600 | Buyer | Buyer | Dec | 135 Pts. ’16 + 160 Pts. ’17 + 160 Pts. ’18 |
Bay Lake Tower | $106 | 320 | $33,920 | Buyer | Seller | Dec | 320 Pts. ’18 |
Bay Lake Tower | $119 | 160 | $19,040 | Buyer | Buyer | Aug | 2 Pts. ’16 + 320 Pts. ’17 + 160 Pts. ’18 |
Bay Lake Tower | $109 | 170 | $18,530 | Buyer | Buyer | Jun | 49 Pts. ’17 + 170 Pts. ’18 |
Boardwalk | $96 | 150 | $14,400 | Buyer | Seller | Feb | 150 Pts. ’18 |
Boardwalk | $98 | 220 | $21,560 | Buyer | Buyer | Aug | 252 Pts. ’17 + 220 Pts. ’18 |
Boardwalk | $99 | 270 | $26,730 | Buyer | Buyer | Aug | 270 Pts. ’16 + 540 Pts. ’17 + 270 Pts. ’18 |
Hilton Head | $58 | 270 | $15,560 | Buyer | Pro-Rated | Dec | 256 Pts. ’17 + 270 Pts. ’18 |
Hilton Head | $52 | 200 | $10,400 | Buyer | Seller | Apr | 200 Pts. ’18 |
Old Key West | $71 | 230 | $16,330 | Buyer | Buyer | Sep | 230 Pts. ’17 + 230 Pts. ’18 |
Saratoga Springs | $83 | 175 | $14,525 | Buyer | Buyer | Aug | 194 Pts. ’17 + 175 Pts. ’18 |
Vero Beach | $46 | 250 | $11,500 | Buyer | Buyer | Feb | 250 Pts. ’17 + 250 Pts. ’18 |
WL: Boulder Ridge | $84 | 170 | $14,280 | Buyer | Seller | Jun | 170 Pts. ’18 |
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Comments
We have one in for review now and are very nervous as the asking price for the BWV points was so low. Just now wondering if we should have offered over their asking price…
Nick, Is there any reason as to why Disney has a 100 point minimum for Add On points at Polly? Even Copper Creek doesn’t have this restriction.
Rob, I know this has been done before. A previous example that quickly comes to mind is Bay Lake Tower, in which for a period of time while Disney was actively selling it in 2008-2009 there was a minimum add-on of 100 points. I’m not entirely sure on the reasoning. Perhaps there is a thought that Members who were looking to add-on smaller amounts will bump up to 100? I know with Bay Lake Tower the restriction was lifted in time.
35 SSR seems like a lot. Do you think it was because of low cost per point ? or is it more of a reflection of adding on to Disney Springs ? (I know combo of both)
Dave, great question. I do think Saratoga Springs is always a solid alternative product to because of its economic value when considering price, years left and dues (and having Disney Springs doesn’t hurt). Please see the following blog for an economic value comparison: https://www.dvcresalemarket.com/blog/best-economical-dvc-resort-to-purchase-spring-2017/
Does Disney look at the profile of the prospective buyer or is it simply the numbers? Just wondering as it seems hard to determine the logic behind which contracts get waived vs which get exercised. I have been tracking these for a while and know what I want to purchase and at a price I want to pay. However, sometimes that contract would get through and other times it would not.
Shane, I was worried about the same thing too because I have inquired a lot to through Disney. They send me all kinds of stuff in the mail and by email. I thought there was no chance of me getting a resale. But I got a great deal on a Baylake tower. I thought they would surely be profiling me. And might hold up my deal because they think they have a shot at selling me direct
Shane, we have never seen a correlation with the profile of a buyer. We have noticed correlations with price and point availability. Although, those correlations are not full proof they are good directional information. In the past, there has been the occasional contract that seemed to be bought at random as well, likely to throw the market predictions off a bit.
The buy back of Boardwalk @ $96 150pts. $14,400 Feb 150 Pts. ’18 is odd considering they waived my Boardwalk @ $94 150pts. Jun 150 Pts.’18 the month before.
I just thought the same thing. We just passed through ROFR with 240 points at $68 for Saratoga Springs. We close next month. We don’t have any 2017 or 2018 points. Yet Disney bought back 175 points at $83? Doesn’t make any sense how they’re making this decision!
Nick: I have two contracts with DVC Resale in ROFR process. I believe that DVC is currently selling only Copper Creek and Polynesian points, so what do they do with the points they buy back at other locations?
Mark, DVC will resell those points they buy back through ROFR. However, it may be in much smaller volumes as they have much more inventory at the resorts recently developed such as Polynesian and Copper Creek. Below is a link to DVC’s current prices on all resorts: https://www.dvcresalemarket.com/buying/direct-vs-resale/
If DVC buys back, let’s say 200 points….can DVC split the 200 points into smaller contracts?
200 into 4 50 point contracts or do they have to sell direct again as the original 200?
PJ, if DVC buys back a contract they can split it up and sell it as smaller contracts.
Can you post a link or Excel list of contracts that did pass?
Thanks for this info. It is greatly appreciated.
Robert, We don’t have anything prepared like that already, but I do understand how that could be helpful. We will consider an efficient way we may be able to do that for future reports. In the meantime, if you are trying to do some research for an upcoming purchase and want some more insight regarding what passed, please feel free to contact me directly and I can go over some contracts that are comparable to what you are considering. A link to my direct contact information: https://www.dvcresalemarket.com/about-us/agents/nick-cotton/
How many bwv passed in April?
Teresa, 10 Boardwalk contracts were waived in April.
how many HHI contracts passed this month?
Chad, 4 Hilton Head contracts were waived in April.