When purchasing real estate abroad, investors often face the need to convert funds into another currency . This process, sometimes referred to professionally as “currency conversion,” plays a key role in ensuring a secure and profitable transaction. The right approach minimizes risks associated with exchange rate fluctuations, fees, and transfer delays.
Why is a currency reshuffle necessary?
When purchasing real estate in another country, your funds may be held in the national currency, but payments to the developer or seller require a foreign currency. For example, an investor from Ukraine may hold hryvnias, but pay for an apartment in Dubai in dirhams. Incorrect calculations or late transfers can lead to financial losses. Converting the currency ensures the exact amount at the time of transfer and minimizes risks associated with exchange rate fluctuations.
Furthermore, a smart currency conversion allows you to plan large transfers in advance and avoid unexpected overpayments for commissions and conversion. Investors can choose the most favorable exchange rate and lock in the amount to be used for real estate payments.
Currency exchange methods
Hawala remains one of the most popular methods of currency exchange in real estate transactions . This method allows funds to be transferred between countries through a network of trusted intermediaries, without the need to open bank accounts or undergo complex currency control procedures. Hawala is characterized by its high speed: funds can be credited to the recipient within a few hours, and all transactions remain confidential and fully controlled. The investor agrees on the amount and exchange rate in advance, and a trusted agent in another country receives the funds and transfers them to the recipient. This method is especially convenient for large transactions where it is important to maintain a precise amount and expedite the payment process.
Another method is hand-to-hand , or “from hand to hand.” It involves the in-person transfer of cash through a trusted intermediary, who delivers the money directly to the recipient. This method gives the investor complete control over the process: they can observe the transfer of funds and be confident that the money will reach the developer or seller. Hand-to-hand allows you to bypass bureaucratic delays at banks, which is especially important for urgent transactions or when making a deposit for real estate. As with hawala, choosing a reliable intermediary and having official confirmation of the transfer of funds remains key to ensure the transaction is secure and transparent.
Risks and Tips
Changing currencies in real estate transactions requires careful consideration. Exchange rate fluctuations, hidden fees, and the choice of intermediaries can significantly impact the final transaction amount. It’s essential to clarify all transfer terms in advance, fix the exchange rate, and obtain official transaction confirmations.
Particular attention should be paid to verifying counterparties—whether it’s a bank, a check manager, or a cash-to-cash intermediary. Reliable partners and transparent terms minimize risks and give investors confidence that funds will be delivered to the recipient correctly and on time.
Result
Converting currencies in real estate transactions isn’t just a matter of exchanging one currency for another. It’s a crucial part of transaction planning and security , helping investors minimize financial losses, avoid misunderstandings, and make payments as conveniently as possible. Choosing the method, verifying the counterparty, and documenting all terms are three key rules that ensure a secure and transparent process.
