Canadians (and other foreign nationals) purchasing real estate have to deal with an additional variable that doesn’t confront most buyers – currency risk. Even seemingly small fluctuations in the exchange rate between the Canadian and American dollars can cost real dollars at the close of escrow.
The folks over at Globex have a solution for this – forward contracts that allow Canadians planning on buying real estate in the states to lock in current rates and mitigate the risk from currency fluctuations.
As Snow An at Globex explains it …
A 10% deposit secures the forward contract with the 90% balance due on the maturity of the contract. For example, if the client wishes to buy $150,000 CAD worth of USD but does not need them for 6 months, the rate can be locked in at the current rate. A deposit of $15,000 will be put down and the remaining balance would be paid in six months.
This protects the client from any exchange rate movements that occur in that 6-month period and reduces exchange rate risk.
Globex also has the ability to act intra-day if needed. According to the little widget on the left the U.S. dollar’s currently a little higher than the Canadian dollar but there have been swings of up to 4 cents (roughly .98 to 1.02) over the past several weeks. Four cents may not seem like much, but that 4 percent quickly adds up on a $200,000 purchase.
Want more information? Drop me a line and I’ll get you in touch with Snow An.
I’d provide the info here but I’m admittedly being selfish … this week I had to fire a third Canadian client who felt all agents were interchangeable and that we collectively should be happy for whatever scraps are thrown our way as they work with several of us at once.
Not so much. Not for me and not at $4.17 a gollon.
[tags]Phoenix real estate, Canadian buyers Arizona real estate[/tags]