Head of Private Clients
Do you own an overseas home, but after many happy years of memory making the time has finally come to sell up? Having banked that buying experience, you’ll be pleased to hear the overseas selling process is similar to the approach you took to make the initial purchase. Or perhaps you have inherited a foreign property that you want to sell during what is already a stressful time. Whatever your reason for putting your property on the market, don’t be daunted.
Selling abroad, whether it be in France, Portugal, America or wherever, should be no more difficult than selling in your home country. Simply follow our step-by-step guide to understand how to sell your property safely and successfully. With a little know-how, you can avoid the associated pitfalls.
Need to move currency
Figure out your finances
Before taking your first step on your selling journey, get a rough idea of how much your property is worth by researching what homes like yours have sold for recently in the local area. This will help you to calculate how much money you will be left with after you have paid off the mortgage. However, your figures will only be a guesstimate until you have exchanged contracts and have a completion date. Then you will know the precise redemption (total outstanding) amount for your mortgage.
If you’re using the proceeds to buy another property - whether you’re downsizing, upsizing, moving to a new location overseas or returning to the UK - dig out your mortgage paperwork or speak to your lender to check if you need to pay early repayment charges for switching to another lender or whether it’s possible to transfer it to a new property. If you’re planning to buy a more expensive property or your mortgage deal is ending, this is a good opportunity to remortgage onto a better deal.
The fundamentals of selling a property overseas are relatively straightforward: putting it on the market, preparing for viewings, accommodating viewings. But you will also be exposed to some technical factors, such as legal and financial regulations. To navigate these often confusing elements of the selling process, you must engage the services of professional experts. These specialists possess the knowledge and experience that’s required to provide you with the right information when you need it - helping you to sell your overseas property without a hitch.
Ensure you have a team of specialists on your side by getting in touch with an estate agent, lawyer, independent financial adviser and currency specialist early in the selling process - and don’t forget to factor their costs into your finances.
Another useful resource is The Alliance of International Property Owners- which provides free knowledge, support, guides, inspiration and special offers to British owners of a foreign property.
Choosing an estate agent
The right estate agent will play a crucial role in helping you sell your property at the right price and without delay.
Top tips for choosing a reputable estate agent:
- Choose an agent that’s registered with a regulatory body in the country you’re selling a property in.
- Choose an estate agent that understands the requirements of selling both to the local market and foreign buyers - this will help you to set your expectations about the sale price.
- Choose an agency with a real office with a real address.
- Choose an agent with plenty of experience, so you’re confident they have established a good reputation and have a wealth of local knowledge.
- Read reviews and testimonials about their service.
- Check they are proactive by assessing how long it takes for them to respond to your requests.
Your estate agent can also arrange professional photography, write a compelling property listing, advise you on the best time to sell, and target expat buyers - giving you the best chance of making a successful sale.
Choosing a lawyer
As soon as you decide to sell, engage the services of an independent, English-speaking lawyer who specialises in property law.
Top tips for choosing a reputable lawyer:
- Ask for recommendations and request testimonials.
- Research their credentials - check that they belong to the local bar association.
- Check they have experience in property laws.
- Check if they speak good English.
Most countries use the 'notarial system'. A notary is a person authorised - by you - to perform certain legal formalities, especially to draw up or certify contracts, deeds, and other documents for use in other jurisdictions. For example, in Spain, the notary is called ‘the escritura’, and in France, they are called ‘the notaire’.
If you are unable to attend to the sale of your property personally, your lawyer should offer a notarial service. Sellers typically grant power of attorney to their estate agent or lawyer who can undertake the transaction and sign the deed on their behalf. The relevant paperwork can be signed before a notary public in the UK.
Choosing an independent financial adviser
An independent financial adviser (IFA) can help you manage your tax obligations and reduce your costs when selling a property overseas.
If you live in the UK and own a second home abroad - whether it's a sun-drenched villa in Spain or a ski chalet perched high in the French Alps - you might be in for a shock if you don’t seek expert advice around the relevant tax laws. For example, if you earn an income through renting your property to tourists or long term tenants abroad, you could be liable to pay capital gains tax on disposal of the property. You may also have to meet foreign tax obligations when you sell or dispose of your property.
Choosing a currency specialist
Choosing a currency specialist is just as important as working with an estate agent that can facilitate your sale, a good lawyer that can ensure it is legally sound, and an IFA that can oversee your tax obligations. That’s because there's another big risk when selling property overseas: currency risk. From estate agent and lawyer fees to a lump sum from the final purchase, every transfer you make as part of the overseas selling process is exposed to this risk, potentially costing more than it should - and denting your profits.
Currencies are traded around the clock. We know that they strengthen and weaken each day because banks and investors purchase huge volumes in response to political and economic news: positive news about a country typically causes the value of the currency to rise (“strengthen”) while bad news causes it to fall (“weaken”). Consequently, the value of the pound against other currencies is constantly changing - not just daily but by the minute.
We also know when they might move, because we often know when political events will occur and the economic calendar shows us when influential economic data will be released. However, there will also be news that happens without warning - anything from a US president tweeting late at night to a fall in the price of bauxite.
But what we cannot predict – and no one can – is whether they will move up or down or by how much. Even slight fluctuations can make a big difference to the amount of money you receive from your sale. In some instances, the impact of the political and economic variables that influence exchange rates can be severe - as has been proved in recent times. Take Brexit and the Covid-19 pandemic for example:
- Brexit: On 23 June 2016, the UK voted to leave the EU - a decision that took markets by surprise. Last-minute polling suggested that ‘remain’ had the edge, so when the Brexit result reverberated around the world the pound fell off a cliff, experiencing its largest intraday collapse in 30 years.
- Covid-19 pandemic: Back in March 2020, when the true extent of the Covid-19 pandemic became clear, the pound sunk to its lowest level against the dollar since 1985 and its lowest level against the euro since the depth of the financial crisis 11 years earlier.
The dynamic nature of exchange rates means they also have a habit of presenting opportunities, even during times of heightened economic uncertainty. So, as the Covid-19 crisis continues to trigger historic levels of currency market volatility, a currency specialists repatriation service can help you capitalise on favourable rates, so more of your money makes it home with you – as well as mitigating adverse rates to prevent the market moving against you.
The process of selling your overseas property and transferring the funds back home can also cost more than anticipated in additional costs and charges – especially if you use a high-street bank. Currency specialists typically offer a transparent service free of hidden charges.
Avoid making common mistakes
Selling your home can be time-consuming and emotionally challenging, especially if you’ve never done it before. With the technical elements of your sale in good hands, don’t fall into the trap of making these common mistakes:
- Getting emotional: Putting your house on the market exposes it to scrutiny from agents and buyers. It’s natural to feel emotionally attached to your home, but remember that this is a business transaction, so try not to take feedback personally.
- Setting an unrealistic asking price: When you’re emotionally attached to a home, you may be tempted to overprice it. Overpriced homes typically don’t sell. Research conducted by the informational home sale website HomeLight.com showed that 70% of estate agents said that overpricing is the No.1 mistake that sellers make.
- Selling when the market is quiet: Winter - especially around Christmas - is typically a slow time of year for property sales in warm climates, with people less inclined to travel to these locations out of season. With fewer buyers in the market, it may take longer to sell your home, and you may not achieve your asking price.
- Rushing listing photos: People often drop the ball when it comes to selling their home online by failing to showcase their property’s best assets - from taking photos in the evening to leaving their place a mess. Take the time to get this right and it will set your listing apart and help generate extra interest.
- Not having insurance: If you don’t have a homeowners insurance policy in place, get yourself some short-term cover in case a viewer has an accident on the premises and tries to sue you for damages. Make sure there are no obvious hazards at the property or that you take steps to mitigate them.
- Hiding major issues: The chances of any problems with your property being uncovered during the viewing or survey are high. Therefore, as a seller with integrity you have three options: fix the problem before putting your property on the market, price the property below market value to account for it, or list the property at a normal price and offer the buyer a credit to resolve the problem.
- Not preparing for the sale: Sellers who do not clean their homes before viewings are already on the back foot. If you can’t afford to hire a professional cleaning service, set aside some time to give your property a deep clean yourself. While failing to do simple DIY jobs - such as fixing a broken doorknob or dripping tap - can add up in a potential buyer's mind, making them less inclined to offer the asking price.
Clear Currency specialises in helping clients who are buying or selling properties overseas to save money when making international payments - both large and small.
Transferring large sums of money into another currency and transferring them overseas can be daunting and confusing. Aware of this, we use our knowledge and experience to cut through the jargon and give you a friendly and personal service.
We recognise that it’s impossible to accurately predict how exchange rates will perform; therefore, it’s prudent to plan for all eventualities. With this in mind, we will assign you a dedicated account manager. In addition to helping you benefit from quick, easy, reliable and secure transfers, they can help you mitigate the impact of currency risk on the profits from your property sale.
Your account manager will work in partnership with you throughout the selling process - not just when the time comes to transfer your proceeds back home. Because fluctuating exchange rates make it hard to judge how much money will make it back into your bank account, your dedicated expert can help you execute a forward contract. This allows you to lock in an exchange rate for a date in the future, securing the value of your transfer should the selling process take longer than expected.