DVC Right of First Refusal (ROFR): December ’17 Report

Filed in Disney Vacation Club, DVC, DVC Resale, ROFR, Saratoga Springs

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Disney's Saratoga Springs Resort & Spa

In the month of December, Disney exercised their right of first refusal (ROFR) on 4 of 186 vacation club contracts sold through the DVC Resale Market, representing 2.2% of the contracts sold. This lowered the 2017 buy back rate to 6.9%.

December marked the lowest buy back rate of the year.  The only months that came close to that low of a rate were June and July, which also saw buy back rates less than 3%.  In December, 97.8% of contracts were waived by Disney, which raised the 2017 waiver rate to 93.1%.

Disney Buy Back Comparison 2017 to 2016

When comparing 2017 to 2016, the buy back rate increased from 4.4% in 2016 to 6.9% in 2017.  The biggest difference in the two years can be attributed to early 2017, as the highest concentration of buy backs occurred early in 2017 as the resale market was experiencing nearly 2 year lows in pricing.  The average sales price for resale contracts in early 2017 was in the upper 80’s per point.  With Disney buying back a high number of contracts (nearly 15% in February) and many buyers coming to the market, resale inventory shrunk significantly and consequently prices rose.  To start 2017, the DVC Resale Market had nearly 400 active listings, by September there were less than 50 active listings.

Disney Vacation Club ROFR Buy Back Forecast for 2018

If prices continue to rise in 2018, the buy back rate may remain low as for the better part of 2017, the price per point and buy back rate shared an inverse relationship in which as price per point rose, buy back rate declined as seen below.

Price Per Point and Disney's Buy Backs for 2017

However, with some hefty direct price increases coming in January, Disney may once again take a more aggressive approach to start the year.  Notably, Disney only bought back 1 Grand Floridian contract, 0 Grand Califorian contracts and 0 Polynesian contracts that were brokered by DVC Resale Market in 2017.  With prices of those resorts increasing to well over $200/point on January 17th, it will be interesting to see if buy backs begin to pick up for those premium resorts.

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.

Disney Vacation Club Resort Contracts 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 in 2017:

ROFR buy backs for 2017

Details on DVC Buybacks

In December, Saratoga Springs was only resort bought back. It was a fitting end to 2017, given the buy backs for Saratoga Springs greatly exceeded those of any other resort.  Saratoga Springs finished 2017 with 53 buy backs, and the next closest resort was Old Key West at 29.

Details on the contracts bought back in December are below:

Resort $/Point Pts. on Contract Price Closing Costs Paid by ’17 Dues Paid by Use Year Point Availability
Saratoga Springs $89 250 $22,250 Buyer Seller Aug. 0 pts.’17 + 250 pts.’18
Saratoga Springs $89 200 $17,800 Buyer Seller Jun. 0 pts.’17 + 200 pts.’18
Saratoga Springs $85 300 $25,500 Buyer Seller Jun. 0 pts.’17 + 222 pts.’18
Saratoga Springs $84 150 $12,600 Buyer Seller Mar. 0 pts.’17 + 0 pts.’18

Buy Back Rates for Disney Vacation Club Resorts

The only resort to see buy backs in December was Saratoga Springs.   The table below shows the percentage of buy backs for Saratoga Springs:

Resort Buy Backs Number Sold Percentage Bought Back
Saratoga Springs 4 39 10.3%

 

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