Those who know me best know that I love to use analogies to explain circumstances. It dawned on me the other day that being a buyer in the current market is a bit like playing in a game of Texas Hold Em’ poker. Most of us have played poker sometime in the past in which your success of winning a hand involves a few variables:

What cards are you dealt?
What betting position are you in (IE betting first, middle, or last)?
How many other players are at the table?
How many chips to you have?

The best poker players know their odds of winning each hand just by evaluating these factors long before they ever start betting and playing a hand. Lets dive a bit deeper into these factors to see how they relate to being a buyer in the market.

What Cards are you dealt?

Perhaps this is the most important aspect that a buyer should pay attention to when they are looking to purchase a home. Imagine sitting at the poker table and being dealt an Ace/King. I’d be pretty excited to have a strong hand that has a great chance of winning, but l realize that I still need to play everything right to win. In real estate, this is like being a cash buyer with a healthy budget, or having a super strong loan where I can have a huge downpayment and can fully cover a higher list price and any appraisal gaps.

More frequently, I see buyers that have a decent hand, say for instance a 8/9 suited. This would be like having 10-15% down conventional loan in a decent price range and the ability to bid above list price with some cash cover appraisal gaps. This is a winnable set of cards, given the right circumstances and very deliberate play. Unfortunately, too many buyers are not deliberate in the way they play this hand in the real estate market, and get frustrated to see the Ace/King win every bid out there. Perhaps it’s time fold your hand and wait for something else, but many times, you should be paying attention to the other details.

Whats your betting position?

When playing hold em’ your betting position is in relation to the dealer of the cards. The person directly to the left of the dealer puts in the first bet, and can start to dictate how the rest of the hand is played before the dealer puts more cards on the table. I’m not going to get too far into the weeds on the poker aspect of this all, but in real estate, think of this in regards to how fast you are willing to act in the market? Are you being proactive in your approach to searching out homes or purely reactive? Is your realtor in constant contact with you regarding the market and what is coming on? Are you willing to put in some strong bids right away, or do you wait to see what everyone else is doing first? Ultimately, if you can be proactive and get through a potential home first, you may have the upper hand in “betting” to best position yourself to win the hand. This can be huge if you are concerned that other buyers may have the winning hand.

How many players are playing?

This is something that is largely out of your control right? Well, not exactly. If you have an awesome hand like an Ace/King or pocket Queens, it might not matter as much how many other players are at the table as your chances of winning are higher, but for most people, you won’t have those cards to play with, so you want to take that into consideration. In real estate, you need to pay attention to smaller cues that will signify just how much demand there may be for that home. How hard it was to get a showing? Is the showing booked solid immediately upon going live? Are there limited showing windows? Is the home professionally staged and marketed? Is there an offer deadline? You have to remember that the best marketed and priced listings are set up to get as many players to the table as possible to get the bidding as high as possible. If you are concerned that you won’t be able to compete for that particular home, it might be worthwhile to search out a table with lower stakes where you can be the best player. On the flip side, if you are a buyer with a great hand, remember to act fast and aggressively to see if you can’t limit the amount of other buyers before the property is bid up to unrealistic ranges.

How many chips do you have?

In poker, the amount of chips you have is a huge advantage in being able to control the hand. The good news is that in real estate, you don’t loose chips each time you make an offer, but if you are getting into too many hands and never winning, you are prone to make bad decisions down the line trying to win a hand. Keep in mind that the best poker players are patient with their chips and are always waiting for the right time to “go all-in”. Trying to play every hand and offer on every home will undoubtedly get exhausting, and you may just end up deciding to leave the game altogether out of frustration. Being deliberate on the homes you offer on is the same as folding in hands where you know that you won’t be able to compete with the early bidding. As a buyer, you may need to talk to family to help out with downpayments, or perhaps offer a long post occupancy to the sellers if they need it. Remember, your success as a buyer is only as good as how well you can solve the sellers problem, so make sure you have a realtor who is skilled in figuring out the problem that you are trying to solve. An Ace/King can totally flub a hand of poker by not playing their cards right, and can loose out to a lesser hand who just solves the problem more creatively or better in general.

The ace in your sleeve:

Did you know that in 2021, 1 out of every 5 single family homes in Fort Collins sold for cash? The first step in being successful is understanding the rules of the game and how to play, but if you truly want to be successful, the best way is to make sure that you have the best possible cards. Increasingly, there are creative solutions in the market to make you more successful, and the best solution that I have seen so far is the ability to be a cash buyer. My company, 8z real estate, has 2 solutions that instantly give you an Ace/King right off the bat in their cash buyer program, and modern bridge program. Give me a call and we can discuss the details further than this video will go into.

8z Offers - Cash Buyer and Modern Bridge Program

As always, I appreciate you taking the time to read through my thoughts on the subject. If you have thoughts or comments on the home buying or selling process, I’m always here for a conversation or consultation to see how we can accomplish your objectives together as a team! - Tim (970) 999-4581

Using poker to navigate a home purchase