Sometimes life throws curveballs. If you’re a Disney Vacation Club owner and you financed your DVC purchase and have fallen behind on payments, or if you have fallen behind on your annual dues, you might be approached by Palm Financial (Disney’s in-house lending company that they finance the purchase of DVC contracts through) offering a deed transfer in lieu of foreclosure on your DVC contract.

Before you immediately jump on the offer from DVC, consider if it is the best or only path forward!

As you already know, DVC is Disney’s Timeshare program. And while timeshares generally have a reputation for not being a good investment, Disney Vacation Club has historically held its value or appreciated in most cases! This means that while you might be behind on your payments, you may not be “upside down” on your DVC contract. In other words: It might be worth more than you still owe on it!

When Disney Vacation Club does a deed transfer in lieu of foreclosure, they will typically offer to let you walk away from whatever you still owe on your DVC contract free and clear in exchange for just giving it back to them. A big draw to these types of agreements is that they generally keep the default off your credit reports.

However – If you initially paid a reasonable down payment and/or you have had your DVC contract for at least several years, it might be worth a lot more than what you currently owe, and you would actually make a lot of money by selling your DVC contract on the resale market.

As an example: Let’s say you bought a 250 point contract at Copper Creek in July of 2017 for $170 per point and you put 20% down. Your total price would have been 250 * $170 = $42,500 and you would have put $8,500 down.

If we assume you financed the remaining $34,000 at 10% interest for 10 years, your payments (not including dues) would be roughly $450/mo. If you paid that for 5 years up until July 2022, your principal (the amount you still owe) would be about $21,000.

It might seem like a good deal to just let DVC take back the contract and forgive the $21,000 you owe instead of foreclosing on it.

However, if you were to sell that contract on the resale market, you could expect it to sell for about $145 per point based on the current DVC resale prices. That translates to $36,250!

In this scenario, you could sell your DVC contract on the resale market, pay off the $21,000 you owe, and STILL put $15,000 in your pocket!

If you have an offer to transfer your DVC contract in lieu of foreclosure and want an opinion on your best option, send me a message through the Contact Us form. I’ll be happy to help you navigate your options and provide a recommendation!