PDF There are many aspects for your Canadian clients to consider when they are purchasing property within the country, such as the quality of local schools, the cost of financing, etc. Fortunately, as REALTORS® you have the resources to make their purchase process as easy and stress free as possible…. Even though the price in Canadian Dollars will remain a constant CAD$500,000 over the next 30 days, the cost to your client in Pounds Sterling or US Dollars will be fluctuating along with the currency market…. But, over the next 30 days the US dollar severely weakened relative to the CAD, and at the end of the closing period in early May the $/CAD rate had fallen to 1.1020.
…One way to protect your American or UK clients against these currency risks is to recommend a currency specialist like HIFX Inc., who offers a free service that can lock in an exchange rate for your clients for up to 2 years. Currency specialists can also typically provide a much better exchange rate than the banks at zero cost to your client, resulting in a 1%-3% tangible savings.
Currency Specialists: Protecting Your Clients from a Risk They Never Knew Existed
Guest column by Tom Wight, HIFX Inc ., Thomas.Wight@hifx.com.
There are many aspects for your Canadian clients to consider when they are purchasing property within the country, such as the quality of local schools, the cost of financing, etc. Fortunately, as REALTORS® you have the resources to make their purchase process as easy and stress free as possible.
If your clients are from out of the country, however, there is another very important issue that could drastically affect their actual purchasing power. They may not even be aware of currency risk.
Fluctuating currency exchange rates can have a huge affect on a foreign investor’s purchasing power. For example, imagine you are helping a Californian purchase a 3-bedroom waterfront property in Nova Scotia for CAD$500,000, with a 30 day closing period. Even though the price in Canadian Dollars will remain a constant CAD$500,000 over the next 30 days, the cost to your client in Pounds Sterling or US Dollars will be fluctuating along with the currency market. These unpredictable variations can severely raise or lower the cost of a property in a very short period of time.
Let’s say your New York or Virginia client had decided to purchase the property in early April, 2006. The $/CAD exchange rate at that time was 1.1750, so your client has to budget approximately $425,531.91 to cover the purchase price. But, over the next 30 days the US dollar severely weakened relative to the CAD, and at the end of the closing period in early May the $/CAD rate had fallen to 1.1020.
Your client would be shocked to learn that the property is now going to cost them $453,720.50, or an additional $28,188.59 over what they had originally anticipated.
Further, if your client uses their personal bank to transfer the funds they are most likely receiving a retail rate of exchange and losing out on an additional 1%-3% to bank profit.
One way to protect your American or UK clients against these currency risks is to recommend a currency specialist like HIFX Inc., who offers a free service that can lock in an exchange rate for your clients for up to 2 years.
Currency specialists can also typically provide a much better exchange rate than the banks at zero cost to your client, resulting in a 1%-3% tangible savings. If your American client from the example above had used HIFX, he or she would have saved over $30,000.
Even with a weakening US Dollar, properties in coastal areas of Atlantic Canada continue to be attractive investment alternatives for Americans and British subjects. A currency specialist can protect your clients from currency risk and provide them with a tangible savings.
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