I was missing a golden opportunity. In my quest to acquire as many points as quickly as I could, I was looking only at resale contracts that were ‘front-loaded’, meaning they had points available as soon as the contract closed. Of course, those are the ones everyone wants, and those are the ones everyone buys. But, as I’ve done more and more research, I’m realizing that might not always be the best route. The funny thing is, I discovered this without even knowing it.
As I mentioned in a previous article, my first resale contract was 250 points at Boulder Ridge for a stunning $89/point. That’s like 2003 prices for DVC. However, the contract was stripped – meaning that the previous owner either used or rented all the current years points, and no new points would come on line until next year. At the time I put an offer in on that contract, I wasn’t thinking about that. I just saw the numbers ‘250’ and ‘89’. Also, as I mentioned in a previous article, I’m of the belief that instant gratification takes too long, so when I realized that I’d have to borrow against next years points in order to do anything with that contract, I began looking for those sexy, beefy, point-heavy contracts. Beach Club Villas with 540 points at closing -SCORE! Bay Lake Tower with 320 points at closing – SCORE! But, add-on-itis….
So I kept looking for more ‘front loaded’ contracts, but that price I paid for Boulder Ridge kept gnawing at me. Then it hit me – I don’t need a TON OF POINTS RIGHT NOW. I have points to work with. I kept having to remind myself “I’m playing a long game here” – “it’s a marathon, not a sprint” – and any other bumper sticker slogan I could tell myself to stop from buying every contract I saw.
It made more sense for me, financially, to look for a stripped contract with a long closing than it did for a more expensive contract with immediate points. Here’s why:
- Stripped contracts are cheaper than front-loaded contracts. If you’re diligent and take your time to shop around, you can find some deals – like 250 points at Boulder Ridge for $89 a point.
- Long closings give you more time to put together the money. I’d much rather buy a contract outright than finance it, and longer closings make that a little easier to do. (Note: by ‘longer closing’ I’m referring to contracts that can’t close before a certain date. You’ll see this listed from time to time ‘Can’t close until October 1, 2019’)
- If it’s a larger contract (300 points or more), you might benefit from making an offer at a lower price per point. Sellers are often very agreeable to lower offers. You can negotiate these things the same way you would any real estate deal. That was a surprise to me. Of course, if the price negotiated is too low, Disney will take the contract during the right of first refusal. There’s a great post on our DVC forums at DISboards.com that tracks contracts and shows which ones have been taken and which ones have passed. While it’s not a sure-shot guide to what price will work, it’s a good barometer
- If the contract is being sold by an international seller, chances are stronger that it will pass RofR. There are additional tax hurdles that need to be cleared when a non-US citizen is selling a real estate transaction. Historically, Disney doesn’t like dealing with these so they tend to clear RofR more easily. It’s something to keep in mind when you see “International Seller” on a listing.
There are some downsides to this approach however – the biggest one being that lately, Disney seems to be buying back stripped contracts during the RofR period at a faster rate than other contracts.
Of course, all this is a lot of extra work, and assumes that you’re not looking for ‘instant points’. It certainly requires a bit of patience – especially if you’re looking for contracts in a particular use year. But, if you know what you’re looking for and you’re diligent about it, you’ll find the right contract and maybe save a few $$ in the process.