Last Updated: February 11, 2025
Due to the current economic environment, many Canadian snowbirds who own properties in the U.S. are considering selling their winter homes or condos and renting instead.
Multiple factors have contributed to this perfect storm that makes selling an attractive option, including:
- Property value increases since initial purchase: Many snowbirds purchased their U.S. properties when the Canadian dollar was stronger vs. the U.S. dollar and property values were lower.
However, the recent weakness in the Canadian dollar, coupled with significant increases in property values in many popular U.S. snowbird destinations in recent years has created a scenario where many snowbirds stand to make a substantial profit by selling their U.S. properties, both on the currency exchange side and the property value side. - Higher Maintenance Costs: The weak Canadian dollar, combined with inflation, has significantly increased the cost of owning a U.S. property. Everything from regular maintenance costs to taxes, condo fees and special assessments for improvements has become more expensive.
- Increased Home Insurance Costs: Climate change and natural disasters have resulted in skyrocketing prices for home, flood, fire and hurricane insurance coverage in many popular U.S. snowbird destinations, making it cost-prohibitive to own a home in some of these areas.
For all of the above reasons, many Canadian snowbirds are considering selling their U.S. properties and renting a place each winter instead.
Unfortunately, the costs associated with selling a U.S. property – such as real estate agent and legal fees - can really add up, and in most cases, there isn’t much you can do to save on these expenses.
However, one often overlooked area where it’s fast and easy to save a significant amount of money when selling your U.S. property is on currency exchange – all it takes is a little bit of planning.
If you are considering selling your U.S. property, you should always explore using a discount currency exchange service to convert your funds from U.S. dollars to Canadian dollars.
Here’s what you need to know…
Why should you consider using a discount currency exchange provider?
Simply put, discount currency exchange providers are an easy way to save significant amounts of money on foreign real estate transactions.
Most snowbirds use the exchange rate provided to them by their bank when converting funds back to Canadian dollars after selling a foreign property, which is usually a big mistake.
Banks generally have currency exchange rates that are much worse than the rates you would get from a discount currency exchange provider.
Because discount currency exchange providers focus their business exclusively on exchanging currency and regularly conduct a high volume of foreign exchange transactions, they are able to offer their clients much better currency exchange rates than traditional banks.
While getting a worse rate from your bank may not matter as much when converting small amounts of cash, it can make a big difference when converting large dollar amounts, often saving you several thousand dollars when converting currency.
Take the following example:
Let’s say you sell a property in the U.S. for $500,000 USD and want to convert the proceeds of the sale from USD to CAD and repatriate the funds back to Canada.
A bank would typically take a “spread” or fee in the range of 250 basis points – or 2.5% - to convert your funds to CAD, which would come out to a fee of approximately $12,500 USD.
However, a discount currency exchange provider would typically only take a spread or fee in the range of 50 basis points – or 0.5% to convert the same funds to CAD, which would come out to a fee of approximately $2,500 USD.
In this scenario, you would save approximately $10,000 USD simply by converting your funds using a discount currency exchange provider instead of your bank.
How do discount currency exchange providers work?
Discount currency exchange providers simply act as intermediaries between bank accounts, adding one more step to the currency exchange process.
For example, instead of transferring the U.S. dollar proceeds from the sale of your property to your Canadian dollar bank account back in Canada where the funds would automatically be converted to Canadian dollars using your Canadian bank’s exchange rate, you would send the U.S. dollar proceeds to your discount currency exchange provider, who would then convert the funds to Canadian dollars at a preferred rate and deposit the proceeds into your Canadian dollar bank account.
Setting up an account with a discount currency exchange provider is relatively fast and easy. You will need to provide some personal information and identification to verify your identity, as well as your banking information so they know where to withdraw or send the funds.
While the setup process is usually fast and easy, it is highly recommended that you set up your account with a discount currency exchange provider well in advance of the date you will need to convert or transfer funds to avoid any possible delays and ensure you are aware of documentation requirements that might be necessary for making larger currency exchange transactions.
Things to consider/look out for:
There are a number of companies in Canada that offer discount currency exchange services, however, you’ll want to make sure that the company you choose meets certain criteria to ensure your transaction goes smoothly. Here are a few things you’ll want to consider before choosing a provider:
- Track record and reputation: Before entrusting any company with your money, you’ll want to do your research to make sure they are reputable, have a strong track record and report to FINTRAC – the government body that monitors financial transactions in Canada.
- Expertise in real estate and large cross-border transactions: Look for a discount currency exchange provider that will provide you with a dedicated account manager who has specific knowledge and experience related to larger currency exchange transactions for real estate, as these types of transactions can often be more complex than common every-day currency conversion transactions. Your account manager will be there to assist you every step of the way from start to finish to get you the best exchange rate possible and ensure your transaction goes smoothly, including:
- Getting you the best exchange rate
- Ensuring the sender/recipient information is correct and set up in advance
- Ensuring your funds arrive back in Canada in a timely manner
- Guiding you through any regulatory requirements related to large cross-border currency transactions
- Assisting you if any issues should arise - Forward Contracts: If your real estate transaction won’t be closing for weeks or months, seek out a discount currency exchange company that offers forward contracts to help you lock in exchange rates and protect against exchange rate fluctuations that could adversely affect you before your transaction closes.
Consider the Snowbird Advisor Discount Currency Exchange Program
For over 6 years, Snowbird Advisor has partnered with OFX to offer our members an exclusive discounted currency exchange program featuring preferred exchange rates, flexibility, cutting-edge technology and specialized customer support.
Over that time, many of our members have benefitted by using our currency exchange program for both their everyday currency exchange needs, as well as specialized needs like converting large amounts of currency to purchase real estate outside Canada or repatriating funds to Canada after selling their foreign vacation properties.
If you need to convert currency when selling or buying a vacation property or any other real estate outside Canada, Snowbird Advisor’s currency exchange program can help you save money.
