Joe Cross
Joe Cross

How not to get burned when buying real estate in Europe

Joe Cross is the United States General Manager for TransferWise.

An expert in international money transfers says the increasing number of Americans buying real estate in Europe risk losing thousands of dollars in hidden bank fees by failing to research the different payment methods available.

Joe Cross is the United States General Manager for TransferWise, an international money transfer startup operating on six continents. He said the combination of a strong U.S. dollar and a slow post-recession European real estate recovery are behind the 30 percent increase in the number of Americans seeking a property in Western Europe.

That interest is being seen at TransferWise, as those property buyers look for the most economical way to send funds overseas.

Many people send the money through their banks because it is most convenient, and it is a mistake, Mr. Cross said. That is because every time they send money outside the country, they incur transfer fees and overseas transaction fees, some of which are essentially secret fees account holders are not told about when they transfer the money.

The difference can end up being thousands of dollars in many cases, Mr. Cross explained. And that is just on the original transaction. Then come  annual taxes, property upkeep fees and expenses.

Mr. Cross explained TransferWise can be as much as eight times cheaper because clients are not actually sending money out of the country. When someone wants to transfer funds to a participating country, TransferWise matches them to people wanting to send money in the opposite direction. The money is transferred between the two participants in the same country on both ends of the exchange.

Mr. Cross said the strength of the deal depends on where you look. Prices are headed up in most cities, for example.

“You are not finding a bargain in London,” he said.

Spain and Greece are struggling mightily, and the latter especially is not recommended for the faint-hearted investor, he said from a long-term investment point of view, properties in those countries have never been cheaper.

Before you take the plunge, Mr. Cross recommends finding a local broker who can help you navigate local laws and regulations. In recent years, some countries, including France have passed new laws concerning foreign property ownership.

TransferWise was created four years ago by Taavet Hinrikus and Kristo Kaarmann. Mr. Hinrikus was the first Skype employee and worked in Estonia where he was paid in euros. But his principal residence was in London.

Mr. Kaarmann’s situation was the reverse. He worked in London but had a mortgage in Estonia.

Once a month the duo checked Reuters for the mid-market rate to set a fair exchange rate. Then they put the money in each other’s accounts.

In four years, they have added more than 300 currency routes and saved customers more than $235 million. Customers are transferring $750 million every month via TransferWise. Current monthly growth is between 15 and 20 percent and the platform employs 350 people.

Investors also like TransferWise. They have attracted $91 million from a group included Richard Branson, Peter Thiel and Andreesen Horowitz. Ben Horowitz serves on the TransferWise board, Mr. Cross said.

Mr. Cross said between 15 and 20 percent of U.S. citizens will send money abroad at some point in their lives, many to their country of origin or ancestral homeland. That is a fortune in hidden and visible fees. He said TransferWise uses the mid-market rate and charges one fee of one percent for any amount below $5,000, and 0.7 percent for larger sums.

While other transfer options such as Western Union and various banks claim small fees, once hidden costs are factored in the actual consumer cost can be more than 5 percent of the amount transferred.


Mr. Cross said because funds are sent directly between accounts, TransferWise is a very secure method of transferring cash. He said TransferWise must comply with Know Your Customer legislation, which includes sender and receiver identity verification.

He also said it is rare to see a marked imbalance between the collective amounts being transferred between countries. When it does happen, TransferWise accesses local currency so there is no delay in customers receiving money.

“Early on we made the decision we shouldn’t make people wait,” Mr. Cross said.

Mr. Cross said TransferWise is seeing its biggest growth in the United States, which is only natural given it is the world’s largest market. When new currency routes are considered the company has a fairly organic strategy. They simply follow expressed demand for the service.

“Where the traction is we double down,” he explained.

While TransferWise does advertise, they also follow the maxim of building a better product and letting the customers find them.

“Satisfied customers have driven much of our growth through word of mouth.”

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