Worried about the state of the Pound?

How will the low Pound value, against the Euro,  affect International Estate agents?

Over the last week, we have seen the pound decline in value against the Euro. This has started to affect sales that estate agents have agreed some time ago.

Buyers are pulling out of the deals claiming that the Pound has lost so much value, that the properties they agreed to buy, some time ago, will now cost them many more pounds.

This was avoidable. Sadly, many clients chose to ignore good advice to fix the rate at a given point some months ago when the rate was around 1.17 euros to 1 Pound. They are now faced with getting around 1.08 Euros to a Pound. When put into context, with a house purchase of 200,000 euros, that´s a difference of 14,245 British Pounds!

Your buyer will now have to choose between:

1. finding the extra money
2. buying another property that´s 14,250 GBP cheaper
3. pulling out of the purchase altogether

What can Global Currency Exchange Network do about this?

There´s nothing we can do about the current exchange rate, but we can help by:

1. constantly reviewing the rate and calling your client as soon as it rises sufficiently to mitigate the perceived loss
2. register the clients for what we call a “Limit Order”. This is an agreed exchange rate that the client will be happy to buy their Euros at. In this case, it could be 1.10 euros to 1 GBP. We then call the client as soon as the currencies hit this rate and they have the option to buy at that moment. (More on how we do this later)
3. We register the clients for what we call a “stop-loss order”. This is a point at which the client has the option to buy the currency so that the loss doesn´t get any greater. Using this example, this could be set at 1.06.

How to avoid all of this in the first place?

If you send your clients to us as soon as you have them appointed, we can discuss with them ways to improve their current perceived value of the Pound against the Euro. Of course, we will offer a better rate than any bank. In addition to this, we don´t charge for the transfer or any commission.

Using this example of a 200,000 euro purchase, a bank is likely to offer a rate of 1.06 euros to the pound and we would offer 1.08. The bank is likely to charge a commission of  30 euros and a transfer charge of  up to 60 euros. Finally, we have negotiated that the local banks in Portugal and Spain won´t charge their usual recipient fee of 1% (2,000 euros). This represents a difference in charges of 2090 euros PLUS a rate difference of  3494 pounds

So by using GCEN, your client would be likely to save 5346 Pounds.

Quite a difference and likely to create a more stable sale / purchase for you

One last way to avoid this:

If the clients are introduced to us early enough, we can offer what we call a “Forward Currency Contract”. This is ideal for everyone. The client will only have to part with just 10% as a deposit (20,000 euros in pounds equivalent). After that, they have fixed the rate and can relax as their only commitment is to part with the balance on the date when the currency deal matures. This is usually set for a month after the sale is anticipated to go through. The client can complete the deal early by sending us the balance money and the property deal can go through on time.

We´re here to help you with your sales. Feel free to call one of us anytime if you think we can help.

Alison in Portugal, Marie in Costa Blanca, Lucy and Emma in Mojacar.