This post contains sponsored content from DVC Rental Store and DVC Resale Market. Help support WDWNT by using the links in this article to book your next resort stay with our sponsors, DVC Rental Store and if you’re considering purchasing a DVC contract, check out how much you can save with DVC Resale Market.
Disney’s Right of First Refusal (ROFR) is always a hot-button topic in the DVC realm. And today we’ve noticed a pretty big change in Disney’s use of their Right of First Refusal. But before we get into the details, we’ll explain what exactly is Right of First Refusal for those who haven’t heard of this concept.
What is Right of First Refusal?
To put it simply, Right of First Refusal is Disney’s option to buy a DVC contract from the seller at the same terms as agreed by a buyer after a contract has been executed. For example, I agree to buy your DVC contract for 100 points at Bay Lake Tower for $150 per point. That’s a super cheap price, as most contracts sell for $180 or more per point. If you and I (as seller and buyer) sign a contract for $150 per point, Disney has the right to review the sales contract and decide whether to let the sale proceed, or step in and buy the points at the agreed-upon price for itself, thus thwarting the good deal I as the buyer thought I was getting. Disney addresses the ROFR concept in the DVC FAQ but doesn’t go into a lot of explanation.
Why Does Disney Exercise Right of First Refusal?
Why would Disney want to do this? There are several reasons. The first and most basic is to keep DVC prices high. The lower the price for resale, the more attractive the resale market becomes versus buying direct from Disney. As we’ve seen, Disney keeps hiking the per-point prices of new contracts, sometimes several times per year. The closer the resale price is to the price Disney is charging, the more likely interested buyers will buy direct from Disney. The bigger the difference, the more sales Disney will lose to the resale market. So it is in Disney’s financial interest to keep the resale prices high, and exercising its ROFR keeps the resale prices higher.
Another reason Disney would want to buy back points is so that they can resell them at a higher price to current DVC members. Most older DVC resorts have long been sold out, but when current DVC members find that their needs have changed and they want more points, Disney wants to have some on hand to sell. This is called an “add-on” contract and Disney makes it super easy for existing members to add on more points. But in order to do this, Disney needs to have points available to sell. It can get these points by buying back contracts via ROFR.
This ends up being really frustrating for resale buyers because they might find the perfect contract for their needs, make an offer, the seller can accept the offer, and then BAM Disney buys the contract out from under them. Then they have to start all over again. That’s why it is important to know the trends with recent ROFR buybacks. We’ll talk about the recent trends, but if you’re the kind of person that hates statistics, we recommend consulting with the experts at DVC Resale Market, who know this stuff like it’s their job (because it is). They’ll always be able to give you the best advice about the likelihood that Disney will exercise ROFR at any given price.
New Right of First Refusal Buybacks at Old Key West
The ROFR trend in the past year has been pretty focused on Polynesian Villas contracts, which we’ll talk about more below. But today we noticed a new trend: Disney has started buying back Old Key West contracts with a vengeance, including 12 contracts today alone! Why would Disney all of a sudden want to buy back Old Key West contracts? There are two reasons. The first is the original Old Key West contracts expire in 2042. However, new contracts have been extended to 2057 expiry. Thus Disney can not only to buy these contracts back at a lower price but also flip them into extended 2057 expiration contracts at a higher price. Beyond that, DVC has a current direct incentive on Old Key West points, which runs through June 24, 2024. The buybacks may indicate that Disney has run low on points for this promotion or is preparing to extend it further into the summer.
Polynesian Villas Buybacks Ongoing
Besides the new buybacks at Old Key West, Disney has been buying back contracts at Disney’s Polynesian Villas and Bungalows. With the addition of the new Island Tower at Disney’s Polynesian Villas and Bungalows, Disney seems to be bolstering its supply of points available for sale at this resort. This strategy not only increases the resale value of these contracts but also enhances the overall value of the Polynesian ahead of the Island Tower going on sale in the coming months. Despite the increased price of Polynesian resale contracts, we expect there is still tremendous value to resale over the expected direct price, which will likely open around $250 per point.
What Should You Do When Buying DVC Resale?
In the latter half of 2023, the chance of a DVC contract being bought by Disney was less than one half of one percent (0.5%). That’s so incredibly low as to almost be a non-issue when contemplating an offer price for a DVC contract. But with this recent increase in buybacks, it’s more important than ever to consult knowledgeable resale brokers if you’re interested in buying a resale contract. That’s why we recommend DVC Resale Market, which is staffed by many former DVC cast members who know the ins and outs of buying into DVC.
If you’re not sure about DVC just yet, I recommend trying out the DVC resorts and see if they’re for you. If you’ve always stayed at the All-Stars, a DVC resort can make a big difference in your vacation. To find out just how big of a difference, and whether you think it’s worth it, you can rent DVC points for your next Disney trip. This gives you the opportunity to stay at a DVC resort just like a DVC member, but without buying into the system just yet. If this sounds like a great idea, contact our friends at DVC Rental Store to book your next resort stay in one of the many DVC resorts at Walt Disney World, Disneyland, or Hilton Head Island, Vero Beach, or even Hawaii!