This time each year thousands of hopefuls descend upon Las Vegas with dreams of wealth and riches for the World Series of Poker. Simultaneously, all over the country, both buyers and sellers are engaged in their own individual poker games: negotiating real estate. As someone who played poker professionally this time of year reminds me of what I love about the game and the similarities it shares with Real Estate. Today, we’re looking at 3 ways you can utilize poker concepts to make more money on your next real estate deal.
Push the Action
In the game of poker if you sit at a table with players who are less skilled than you the goal is to create as much action as possible to give you more opportunity to take advantage of your superior skill. In the real estate industry we can see this manifesting itself in today’s seller’s market. With inventory near all time lows in most neighborhoods, buyers can find themselves at a disadvantage as many properties end up receiving multiple bids. As a seller your goal is to push the action and to price your property at the exact price that induces enough action to maximize your profit and take advantage of the advantageous market conditions for sellers.
Put Your Opponent to a Decision
In tournament poker it is always better to put your opponent to a decision for their entire chip stack than to be put to that decision yourself. Much like tournament poker it is always good in real estate to force either a buyer or a seller to make the final decision in negotiations. Ultimately you want to force the other party make a decision for a relatively small % of the overall deal. This forces them to either kill the deal or take a slightly less than desirable deal. This is a great way to add immediate value to your purchase or sale in the right situation. Think of this as making a bluff in poker with a worse hand and forcing your opponent to either call without the strongest possible hand or fold and save their chips.
Know Your Odds
Odds are everything in poker. If you have four cards to a flush you have a certain percentage to hit that flush. If you are drawing to a straight you have a certain percentage to hit that straight. Your main job in poker is to analyze these odds and make the most mathematically sound play for that specific situation. In real estate we find this mathematical segment becoming more and more important as buyers face multiple offer situations. With the asking price becoming less and less important in writing an offer, it’s vital for both you and your agent to analyze a property and its specific value to your situation. From this calculation you can formulate the best possible plan going forward for submitting an offer. This plan will put you in a situation to not only potentially get accepted but also maximize the opportunity for future appreciation and/or add value in today’s market. Much like knowing the odds at a poker table, having an agent who knows the markets can be very financially beneficial.
To all those trekking to Vegas this month for the World Series of Poker or to Open Houses this weekend to battle it out in the World Series of Real Estate, may the odds be in your favor.
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About this blogJustin Rollo of RE/Max Realty Plus in South Boston provides an analytical and irreverent look at the Boston real estate market. More »
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