DVC Right of First Refusal (ROFR): March ’1727 Comments
In the month of March, Disney exercised their right of first refusal (ROFR) on 19 of 252 contracts sold through the DVC Resale Market, representing 7.5% of the contracts sold. This lowers the year-to-date buy back rate to 10.6%. Despite the drop, the 2017 buy back rate is still more than 2x that of the 4.4% buy back rate of 2016. In March, 92.5% of contracts were waived by Disney and year-to-date the waiver rate is 89.5%.
As mentioned in the ROFR reports from January and February 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 mentioned in the February ROFR report, DVC resale inventory has shrunk significantly in a short period of time (300 less active listings in less than 3 months) and shrinking inventory typically leads to rising prices. As anticipated, in March, with continued strong buyer demand and shrinking inventory, the resale market has began to see prices rising. This increase in prices could possibly be the main contributor in Disney’s buy back rate dropping approximately 49% from February to March.
What is ROFR?
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
Details and Data
Price seemed to be the dominating criteria observed with buy backs in March. Outside of the 1 Animal Kingdom contract bought back and the 1 Grand Floridian contract bought back, both of which had strong point availability, the leading criteria appeared to be price. In fact, going into March nearly 90% of the contracts bought back in 2017 had strong point availability, meaning the contracts had all or almost all of the ’17 points and all points going forward. However, in March less than 60% of the contracts fit that mold. Where we did see consistency month to month was with the resorts we saw multiple buy backs from. Saratoga Springs, Old Key West and Bay Lake Tower stayed popular for buy backs. Notably missing from this list was Boardwalk, which didn’t have a single buy back in March despite 9 total buy backs from January and February. Also, we saw the first buy backs of the year for Grand Floridian, Hilton Head and Vero Beach. For a complete list of the buy backs in March, 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||$87||140||$12,180||Buyer||Buyer||Apr||222 pts. ’17 + 140 pts. ’18|
|Bay Lake Tower||$107||210||$22,470||Buyer||Seller||Aug.||210 pts. ’18|
|Bay Lake Tower||$110||160||$17,600||Buyer||Buyer||Jun||160 pts. ’17 + 160 pts. ’18|
|Bay Lake Tower||$92||160||$14,720||Buyer||Pro-rated||Apr||21 pts. ’17 + 160 pts. ’18|
|Beach Club||$97||240||$23,280||Buyer||Seller||Oct||240 pts. ’18|
|Grand Floridian||$139||125||$17,375||Seller||Buyer||Dec||183 pts. ’16 + 122 pts. ’17 + 125 pts. ’18|
|Hilton Head||$50||222||$11,100||Buyer||Pro-Rated||Aug||108 pts. ’17 + 222 pts. ’18|
|Old Key West||$64||400||$25,600||Buyer||Buyer||Apr||400 pts. ’16 + 400 pts. ’17 + 400 pts. ’18|
|Old Key West||$69||150||$10,350||Buyer||Seller||Oct||13 pts. ’17 + 150 pts. ’18|
|Old Key West||$66||230||$15,180||Buyer||Buyer||Oct||32 pts. ’16 + 230 pts. ’17 + 230 pts. ’18|
|Old Key West||$71||210||$14,910||Seller||Buyer||Apr||300 pts. ’17 + 210 pts. ’18|
|Old Key West||$76||150||$11,400||Buyer||Pro-Rated||Aug||147 pts. ’17 + 150 pts. ’18|
|Saratoga Springs||$73||300||$21,900||Buyer||Seller||Apr||300 pts. ’18|
|Saratoga Springs||$81||150||$12,150||Buyer||Buyer||Dec||150 pts. ’17 +150 pts. ’18|
|Saratoga Springs||$75||200||$15,000||Buyer||Seller||Aug||200 pts. ’18|
|Saratoga Springs||$76||170||$12,920||Buyer||Seller||Jun||152 pts. ’17 + 19 pts. ’18|
|Saratoga Springs||$75||200||$15,000||Buyer||Buyer||Aug||200 pts. ’17 + 200 pts. ’18|
|Saratoga Springs||$79||160||$12,640||Buyer||Seller||Oct||160 pts. ’17 + 160 pts. ’18|
|Vero Beach||$50||100||$5,800||Buyer||Buyer||Apr||100 pts. ’17 + 100 pts. ’18|