DVC Resale, Can I counter a counteroffer?

Negotiating DVC Resale Offers: How to Counter a Counteroffer

When you're purchasing a Disney Vacation Club contract on the resale market, negotiation is often a key part of the process. Understanding how to effectively counter a counteroffer can make the difference in securing the contract you want at a price that works for your budget. We'll walk you through the steps and considerations involved in this aspect of DVC resale negotiations.

Understanding the DVC Resale Market Context

The Disney Vacation Club operates as a points-based timeshare system, allowing members to use points at various DVC resorts, subject to availability. When purchasing on the resale market, you need to be aware that Disney retains a Right of First Refusal (ROFR) on resale contracts. This means Disney can choose to purchase the contract themselves if they believe the terms are too favorable to you as the purchaser.

This factor influences negotiations significantly. Sellers may be hesitant to accept offers that could trigger Disney's ROFR, which typically happens when contracts sell for prices well below current market rates. Understanding this dynamic helps you craft offers and counteroffers that are competitive but reasonable enough to pass through ROFR.

The current ROFR environment varies by resort and contract characteristics. Some resorts see more ROFR activity than others, and factors like the number of points, use year, and contract expiration date all play a role in Disney's decisions.

The Home Resort Advantage and Its Impact on Value

Each DVC contract comes with a "home resort" booking advantage, allowing owners to book accommodations at their home resort up to 11 months in advance, compared to 7 months for non-home resorts. This advantage can significantly impact the value of a contract, especially for popular resorts or high-demand times of the year.

When you're evaluating a counteroffer, consider how the home resort advantage aligns with your vacation preferences. If you're primarily interested in staying at that specific resort, the home resort advantage adds considerable value. If you plan to use your points across multiple resorts, this advantage may be less important to your negotiating position.

Popular resorts like Bay Lake Tower, Polynesian Villas, or Riviera Resort often command premium prices partly because of the difficulty in securing reservations there without home resort priority. This context should inform how aggressively you're willing to negotiate on these contracts versus others.

Steps to Counter a Counteroffer Effectively

When you receive a counteroffer from a seller, take time to evaluate it carefully before responding. Here's how to approach this process systematically:

Assess the Offer Against Market Data

Consider the terms of the counteroffer, including the price per point, the number of points, and any additional conditions. Compare these to recent sales data for similar contracts to determine if the counteroffer represents fair market value. Look at contracts with similar point totals, use years, and expiration dates at the same resort.

We maintain current market data on recent DVC resale transactions, which can help you understand whether the seller's counteroffer aligns with recent comparable sales. Don't rely solely on asking prices, which can be inflated. Focus on actual closed transactions.

Evaluate Your Budget and Financial Goals

Ensure the new terms align with your budget and long-term financial goals. Remember to account for annual dues, which vary by resort and typically increase each year. Current annual dues range from around $7 per point at some resorts to over $9 per point at others.

Factor in the closing costs as well. As the purchaser, you'll pay a $500 administration fee to your broker, plus any financing costs if you're not purchasing with cash. The seller typically pays the $150 estoppel fee and transfer costs.

Consider Contract Expiration Dates

DVC contracts have expiration dates ranging from 2042 to 2077, depending on the resort. A contract with a longer remaining term may justify a higher price per point, but the relationship isn't always linear. Sometimes shorter-term contracts offer better value if you're planning a specific timeframe for DVC ownership.

Calculate the cost per point per remaining year to help evaluate whether the price makes sense relative to the contract's lifespan. This can be particularly useful when comparing contracts at different resorts with different expiration dates.

Account for Resale Restrictions

Resale contracts come with certain restrictions that don't apply to direct purchases from Disney. You won't be able to use points for Disney Collection resorts, Adventures by Disney trips, or Disney Cruise Line bookings. You also won't receive certain member perks like merchandise discounts.

If these benefits aren't important to your planned use of DVC, then resale restrictions shouldn't significantly impact your negotiating position. However, if you were counting on using points for cruises or other non-DVC accommodations, you may need to adjust your valuation accordingly.

Communicate Clearly and Professionally

When making a counter-counteroffer, be clear and concise in your communication. Provide a rationale for your offer, referencing market data or specific considerations that support your position. Avoid emotional appeals or ultimatums, which can derail productive negotiations.

Your response might reference recent comparable sales, specific budget constraints, or timeline considerations. The more objective and fact-based your reasoning, the more likely you are to maintain a constructive dialogue with the seller.

Practical Negotiation Strategies

Successful DVC resale negotiations often come down to preparation and patience. Here are practical approaches that can improve your outcomes:

Research the Market Thoroughly

Familiarize yourself with recent sales data and trends in the DVC resale market. Understanding seasonal patterns, resort-specific demand, and current inventory levels will inform your negotiating strategy. Some times of year see more motivated sellers, while others see increased competition among purchasers.

Look beyond just price per point. Consider factors like use year (which affects when your points are allocated), current year point availability, and any banked or borrowed points that come with the contract.

Understand Timing and Market Dynamics

The resale process typically takes 30-60 days, including the ROFR period and closing. This timeline can work in your favor if you're patient and don't feel pressured to accept the first reasonable counteroffer you receive.

Market dynamics change throughout the year. You might find better negotiating use during slower periods when inventory is higher relative to demand. Conversely, popular contracts at sought-after resorts may require more competitive offers regardless of timing.

Stay Flexible on Non-Essential Terms

While it's important to have clear goals, remaining open to compromise on less critical aspects can help with successful negotiations. Determine which aspects of the contract are most important to you and where you might be willing to adjust.

For example, if the price is right but the use year isn't ideal, consider whether that trade-off makes sense for your situation. Or if the seller is firm on price but willing to include banked points or pay for certain closing costs, evaluate whether that package works better than your initial target.

Work with Experienced Professionals

Consider working with a licensed real estate broker who specializes in DVC resales. Their expertise can provide valuable insights throughout the negotiation process, including realistic assessments of market conditions and ROFR likelihood for specific contracts.

An experienced broker can also help structure offers and counteroffers in ways that appeal to sellers while protecting your interests. They understand the nuances of DVC contracts and can spot potential issues before they become problems.

When to Walk Away

Not every negotiation will result in a successful agreement, and that's perfectly normal in the DVC resale market. Sometimes the gap between what a seller wants and what makes sense for your situation is too large to bridge through compromise.

Consider walking away if the seller's counteroffer significantly exceeds recent comparable sales without justification, if they're unwilling to negotiate on terms that are important to your situation, or if the timeline doesn't work with your needs.

Remember that there are typically multiple contracts available at any given time, especially for the larger resorts. Being willing to walk away from one negotiation often leads to finding a better opportunity elsewhere.

Common Negotiation Scenarios

Different situations call for different approaches to countering counteroffers. Here are some common scenarios you might encounter:

The Seller Reduces Price but Increases Other Terms

Sometimes sellers will lower their asking price but add conditions like requiring a faster closing or asking the purchaser to pay certain fees typically covered by the seller. Evaluate the total cost and convenience impact of these changes, not just the headline price reduction.

Multiple Counteroffers from Different Sellers

If you're negotiating on several contracts simultaneously, use this use wisely. Don't play sellers against each other explicitly, but do consider your best alternatives when crafting counteroffers. Having options strengthens your negotiating position.

Sellers Who Won't Negotiate

Some sellers price their contracts competitively from the start and aren't interested in negotiating. If their price aligns with market data and meets your needs, these can actually be some of the smoothest transactions. Don't assume every situation requires extensive back-and-forth negotiation.

Documentation and Next Steps

Once you reach agreement on terms, the formal contract process begins. Your broker will prepare the purchase and sale agreement incorporating the negotiated terms. Review this document carefully to ensure it reflects your understanding of the agreement.

The contract will then be submitted to Disney for ROFR review, which typically takes 30 days. During this period, Disney will decide whether to exercise their right to purchase the contract themselves. If Disney passes, the transaction proceeds to closing.

Keep in mind that until Disney either exercises or waives their right of first refusal, the agreement isn't final. This is why it's important to negotiate terms that have a reasonable chance of passing through ROFR while still meeting your financial objectives.

Understanding how DVC works throughout this process helps you make informed decisions about which terms are worth negotiating and which are less important to your long-term satisfaction with the purchase.

Successful DVC resale negotiations require patience, research, and clear communication. By understanding the market dynamics, evaluating offers objectively, and working with experienced professionals, you can navigate the counteroffer process confidently and secure a contract that serves your family's vacation needs for years to come.