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For a couple of months, I have been wondering what the market price is for Bluegreen Vacation Club points. And, I've wondered how much the "new program" points are worth relative to the "old program" points (I'll post another thread to explain the new program vs. the old program when I have time). I think I now have an answer. The model is fairly complex, so if you need further explanation, post a question on this thread or send me a PM and I'll help you understand it. In any event, I wanted to help people compare various BVC deals so that they could make an informed choice when they buy.
Well, I collected eBay completed BVC auctions over the past two months and I created a model to normalize every auction that sold to make every completed transaction comparable. In other words, I wanted to create a model where I could reduce the auction down to a "real cost per point" as opposed to the fake cost per point that one gets by dividing the purchase price by the number of points.
The variables of the model are as follows:
1) Purchase Price which is the completed auction price.
2) Closing costs. Almost every auction overcharged the buyer.
3) Maintenance fees. As listed, I think most auctions had last years fees. If anything, these are understated. Due diligence is required to determine the exact amount.
4) Annual points. If it were an Every Other Year deal, I divided this by two.
5) Bonus points. I assumed every auction had this year's points available for the reimbursed maintenance fees. This needs to be checked for every auction as I am sure the assumption is incorrect. Bonus points were last year's points included in the deal. I valued those points at the cost of the MF for those points. They are actually worth less since saved points cannot be used for high red, ultra red, special red and leaf season.
Some notes:
1) the purple indicates the actual ebay completed auction number.
2) the red (EOY) indicates that the points are every other year points.
3) "upfront cost per point" is the purchase price plus excess closing costs divided by number of points. I net out the bonus points.
4) 6 year maintenance savings. Various Bluegreen contracts have different methods for calculating maintenance fees. Some are more favorable than others with the "new program" points being the most favorable of all for large accounts. I assumed the baseline maintenance fee is the same as the old program which is $.054/point. Then, I project savings out over 6 years and discount those savings to today's dollars using a discount rate of 6%. I picked 6 years as the expected time of ownership. If you keep your points more than 6 years and you have significant annual savings in maintenance fees, then the purchase is even more favorable.
5) Real cost per point. This is the effective cost per point when all over charges and discounted maintenance fees are netted out of the purchase price. In other words, each person would be paying exactly the same cash over 6 years in each of these deals if they paid the real cost per point upfront.
I know this is complex, so if you have questions, let me know. The model is sound and it does a good job of comparing eBay deals. The real cost changes a bit if you change the discount rate or the expected ownership period.
I'll post my summary and conclusions in the next thread.
Well, I collected eBay completed BVC auctions over the past two months and I created a model to normalize every auction that sold to make every completed transaction comparable. In other words, I wanted to create a model where I could reduce the auction down to a "real cost per point" as opposed to the fake cost per point that one gets by dividing the purchase price by the number of points.
The variables of the model are as follows:
1) Purchase Price which is the completed auction price.
2) Closing costs. Almost every auction overcharged the buyer.
3) Maintenance fees. As listed, I think most auctions had last years fees. If anything, these are understated. Due diligence is required to determine the exact amount.
4) Annual points. If it were an Every Other Year deal, I divided this by two.
5) Bonus points. I assumed every auction had this year's points available for the reimbursed maintenance fees. This needs to be checked for every auction as I am sure the assumption is incorrect. Bonus points were last year's points included in the deal. I valued those points at the cost of the MF for those points. They are actually worth less since saved points cannot be used for high red, ultra red, special red and leaf season.
Some notes:
1) the purple indicates the actual ebay completed auction number.
2) the red (EOY) indicates that the points are every other year points.
3) "upfront cost per point" is the purchase price plus excess closing costs divided by number of points. I net out the bonus points.
4) 6 year maintenance savings. Various Bluegreen contracts have different methods for calculating maintenance fees. Some are more favorable than others with the "new program" points being the most favorable of all for large accounts. I assumed the baseline maintenance fee is the same as the old program which is $.054/point. Then, I project savings out over 6 years and discount those savings to today's dollars using a discount rate of 6%. I picked 6 years as the expected time of ownership. If you keep your points more than 6 years and you have significant annual savings in maintenance fees, then the purchase is even more favorable.
5) Real cost per point. This is the effective cost per point when all over charges and discounted maintenance fees are netted out of the purchase price. In other words, each person would be paying exactly the same cash over 6 years in each of these deals if they paid the real cost per point upfront.
I know this is complex, so if you have questions, let me know. The model is sound and it does a good job of comparing eBay deals. The real cost changes a bit if you change the discount rate or the expected ownership period.
I'll post my summary and conclusions in the next thread.
Lots of points for a good price.
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