Question about converting funds from England

[bif]

I recently sold a painting for a substantial sum of money. The auction house wants to know if I want them to convert it to USD before transferring the money into our bank account or transfer it in Pounds and have our bank convert it. Is there an advantage one over the other?

[DetroitLegalBeagle]

1. Banks usually exchange at a better rate and with lower fees than a third party

But I would check the rates and fees with both and see which is better.

[bif]

2. Chase, our local bank won't charge a fee.

But I won't know the official exchange rate until the transfer date. And I have to let them know in advance.

[DFW]

3. There is a huge advantage if you take matters into your own hands

Banks will screw you to the wall if you let them on large currency transactions. They will be fair IF you let them know that you know what you’re doing. The differences may seem small, but if they can screw you for 2.5% on a million dollars, they will do with a straight face and a smile. That’s a loss of $25,000 for you!

Ideal situation: set up your own account at your bank in British pounds. Then have the auctioneer wire the full amount over in pounds. Don’t let them get away with charging you big transaction fees in either end. These are minimal, and anything over $25 on either end is criminal. Next, get in touch with the foreign exchange desk of your bank. If it’s a decent sized bank, they’ll have one. Tell them you will have a substantial sum of pounds to sell for US dollars, and two days value date (i.e., they get go play with your money for 2 days, S.O.P.) is OK. Do NOT let them suggest anything else. YOU will call THEM when the time is right.

Now comes the nitty gritty. Get a link to a real time foreign exchange screen. I always use Netdania, you may have your own. If these people are pros, and if they aren’t, hang up!, they know the ropes. The spread for pro-to-pro is thirty tics max. A “tic” is a hundredth of a cent. For example, if the Pound is at $1.3437 to the dollar, if they are being nice, they should offer you $1.3407 dollars per pound. If they are being a little greedy, they will offer you $1.3387 dollars per pound. As much as 75 tics ($1.3362) is within bounds if it is a small (under $100,000) transaction. One full cent is bordering on larceny, and anything over that is armed robbery. If they think you have no idea what you’re doing, they’ll try to offer you $1.31 or even less. That is nothing short of the Barrow Gang. Just say no thanks, and get back to me. There are plenty of banks with honest forex traders. Don’t let yourself get screwed by the first one you talk to.

[DFW]

4. One more thing:

When it’s all done, close your pound account, so they don’t start charging you monthly fees for it!