Use Fluctuating Exchange Rates to Negotiate on Overseas Property Investment
With the exchange rates fluctuating, markets changing and scare stories in the press, it’s understandable that you may be wary of property investment abroad. But according to currency brokers HiFX, changing exchange rates needn’t be a negative factor and can be used as a useful negotiation tool to get real estate prices down - if you know how.
1. Use the exchange rate to negotiate hard on your property deals
“Most buyers work to a budget and changes in the Euro/Sterling exchange rate have led to people reviewing what properties they can afford,” says Mark Bodega, from HiFX. “Rather than assuming that because costs have gone up preferred properties are out of reach, buyers should remember that a drop in demand will mean vendors are also feeling the pinch.” This means that buyers are in a good position and can have a go at negotiating property prices.
2. Fix the exchange rate before you pay for your property investment
It’s also worth trying to arrange a forward contract, where you fix the price of the property by fixing the exchange rate. A forward contract means that you buy the currency now and pay for it later.
“We always remind clients that they’d never agree to buy a property in the UK without knowing the final cost. But if you agree to buy an overseas property without fixing the exchange rate at the start, that’s exactly the gamble you’re taking,” says Mark.
3. Get the foreign exchange experts in to help you
If you want to get the best deal on currency exchange for your next property investment, then shop around. High street banks don’t always offer the best deal on foreign exchange, plus there are often extra charges and commission fees to pay, so it’s worth exploring the options available from specialised brokers.
4. Sort out ongoing payments in advance
Don’t forget that if you’re investing in property with the intention of moving abroad, you’re likely to need regular currency transfers. For example you may need currency for making overseas mortgage payments on your property, paying school fees or for pension transfers. By arranging a Regular Payments Abroad Service in advance, the exchange rate can be fixed for up to two years, which may well save you money in the long run.
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