Exchange rates - selling house abroad

animar

Hello. Havent done this before, so hope I am doing it right. My parents are selling their house in Ireland. They will therefore have euros in the bank when they have sold. My parents are 78 and 79 and moving back to the family in England. I am concerned about how we can exchange money from euros to Sterling, and not lose too much money. Does anyone know how we can do this, without paying out loads of commision and reducing their lump sum. Any advice would be gratefully received. My parents need to buy another house when they get to England and are concerned their euros wont convert well anyway, let alone paying a commision for the conversion. Many thanks for any advice

Alan_M_2

There are commercial clearing houses that will handle the transaction for them, don't go to any of the high street banks, they won't be competitive.

Type "foreign currency dealers" into google, you'll get plenty of options.

animar

Thanks Alan. Didnt know about that. Will give it a go. Cheers. Animar

prudryden

For large sums of exchange, your bank should refer the transaction directly to their dealers/traders, if they give you a quote within 20 to 100 pips of the interbank dealing rate, I would take it. The commission should be included in the exchange rate they give you. If they also charge a commission, then I would ask to speak to a manager.

animar

prudryden

Sorry to sound daft but what does "pips" mean? How would I know what the interbank dealing rate is and what is a good deal? Thanks.

Alan_M_2

effectively 20 - 100 pence, or cents etc to whatever relevant currency, one word then describes all currencies.

Actually if it is a large sum - say £250,000 or so, your bank might be worth a call as at that level they may be competitive, my average transactions are between £20K - £50K when buying in stock and it's more advantageous for me to use a broker than a bank at those levels. It can make as much as £500 difference per transaction at my level - once your into 6 figures a bit of shopping around could save over £1000.

prudryden

Animar,
I'm the daft one, because I used "jargon". My apologies.

Pips = basis points e.g. 1.5229 (Euro to the GBP) - the 9 represents 9 pips or basis points.

Interbank dealing rate = spot rate - rather than tourist rate.

EXAMPLE: You sell house for 100,000 EUROS. The current spot rate is 1.5230 bid, 1.5240 offered. You sell Euros to buy GBP, the trader quotes you 1.5340 (100 basis points) over spot rate offer.
Divide your 100,000 by 1.5340 =£65,189.05.
Divide your 100,000 by 1.5240 =£65,616.80. (Traders marked trade up by £427.75 GBP.

Caution: You may get quoted the inverse. Take the number 1 and divide by 1.5240 = .6561 (GBP to the Euro). Then, what you do is take your 100,000 Euros and multiply by .6561 = £65,610. In this case, 50 basis points = 100 basis points. So the trader would only quote a 50 basis point spread.

For the current spot rate, you could try Yahoo Finance- they have a currency converter. As the rate changes every second, it may be up to 15/20 minutes delayed on Yahoo. Not sure how often they change the rate.
I use a different service which is live and not available on the net.

prudryden

Alan -
Thank you. I'm struggling to keep it simple.
Animar -
If you do speak to traders, ask them for the "cross rate" rather than the "exhange rate". They may think that you have done this before and know what you are doing. Might get you a better quote.

The reason for the "cross rate" is because the GBP/EUR cross rate is a function of each currencies exchange rate vs. the USD.

Alan_M_2

It's easy to get lost in the jargon and although I do this regularly enough to understand it, I still get confused on occasion, so it's always worth asking what the value of the final transaction will be...i.e what money comes out the other end after all exchanges/ commissions, that way you don't get any unpleasant surprises.

animar

It is all a bit confusing but I feel a bit more clued up now, and have a starting point. It feels less scary to approach the traders. Thanks so much Prudryden and Alan M, to your time and advice. Might come back for more advice once I get the ball rolling if that is alright. Thanks. Animar

animar

It is all a bit confusing but I feel a bit more clued up now, and have a starting point. It feels less scary to approach the traders. Thanks so much Prudryden and Alan M, to your time and advice. Might come back for more advice once I get the ball rolling if that is alright. Thanks. Animar