DVC Right of First Refusal (ROFR): October ’17 Report10 Comments
In the month of October, Disney exercised their right of first refusal (ROFR) on 7 of 160 vacation club contracts sold through the DVC Resale Market, representing 4.4% of the contracts sold. This lowers the year-to-date (YTD) buy back rate to 7.5%. In October, the buy back rate saw a nearly 40% reduction, going from a rate of 7.2% in September to 4.4% in October. In October, 95.6% of contracts were waived by Disney, slightly raising the YTD waiver rate to 92.5%.
Old Key West accounted for nearly half of the buy backs in October, raising it to the 2nd most commonly resort bought back in 2017. At nearly 50 buy backs, Saratoga Springs still ranks as the most commonly bought back resort in 2017 with over double the buy backs of any other resort.
October’s buy back rate of 4.4% helps to dip the YTD buy back rate to 7.5%, which is still trending over 70% higher than 2016’s buy back rate of 4.4%.
In October, as DVC resale prices slight increased month to month, the buy back rate continued to decrease. This inverse correlation has been consistent throughout 2017 with the exception of August, in which the buy back rate rose along with price. This relationship between price per point and buy back rate is shown in the graph below.
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 year-to-date through October of 2017:
Details on DVC Buybacks
In October, 4 resorts saw buy backs: Boardwalk, Hilton Head, Old Key West and Saratoga Springs.
Notably missing was Animal Kingdom, which encompassed nearly half of the buy backs in September. The prices of the Animal Kingdom contracts bought back in September were in the upper 80’s to upper 90’s per point. However, in October Animal Kingdom contracts were routinely being sold for over $100/pt. This change in price likely led to the significant reduction in Animal Kingdom buy backs.
All 7 of the contracts bought back had all or at least most of the 2018 points available. Some contracts for the same resorts that passed ROFR were sold at lower prices than those listed below, however, the ones that passed for the most part had low point availability for 2018. So, while price is king, point availability still plays a part in consideration.
|Resort||$/Point||Pts. on Contract||Price||Closing Costs Paid by||’17 Dues Paid by||Use Year||Point Availability|
|Boardwalk||$109||270||$29,430||Seller||Seller||Feb.||270 pts.’17 + 540 pts.’18|
|Hilton Head||$68||150||$10,200||Buyer||Seller||Dec.||0 pts.’17 + 150 pts.’18|
|Old Key West||$80||230||$18,400||Buyer||Seller||Apr.||0 pts.’17 + 230 pts.’18|
|Old Key West||$92||210||$19,320||Buyer||Seller||Jun.||13 pts.’17 + 210 pts.’18|
|Old Key West||$80||232||$18,560||Buyer||Seller||Apr.||0 pts.’17 + 232 pts.’18|
|Saratoga Springs||$92||300||$27,600||Buyer||Seller||Dec.||2 pts.’17 + 300 pts.’18|
|Saratoga Springs||$93||140||$13,020||Buyer||Seller||Dec.||166 pts.’17 + 56 pts.’18|
Buy Back Rates for Disney Vacation Club Resorts
There were 4 different DVC resorts bought back in October for contracts sold by DVC Resale Market. The table below shows the percentage of buy backs for those 4 DVC resorts:
|Resort||Buy Backs||Number Sold||Percentage Bought Back|
|Old Key West||3||14||21.4%|