How Does Real Estate Work?

The real estate industry involves the buying, selling and renting of land or structures built on it. Its value tends to rise, making it an attractive investment for those seeking a lucrative return. Agents and brokers capture a portion of that profit by providing a service to those engaged in a real estate transaction. Real estate can be divided into four different categories: residential, commercial, industrial and land.

When most people think of real estate, they immediately envision homes and commercial buildings. While those are part of the industry, they are just a small segment of it. Other types of real estate include raw land, farms and even water rights. It’s the land itself that makes up the majority of the real estate market, with buildings and structures being man-made attachments to it.

There are several ways to make money in the real estate industry, from investing to constructing and managing properties. Those who own real estate can resell it or rent it out for income. Those who purchase property often use a mortgage to finance the investment, requiring them to pay monthly rent that covers the loan payments and other costs of ownership. Ultimately, they hope to sell or rent the property at a profit after the original purchase price and all debts have been paid off. Click here

A real estate investor can also participate without owning the property directly by purchasing REITs (real estate investment trusts) or online real estate platforms. REITs are like stocks in that you buy them through a brokerage firm, while real estate investment platforms connect investors to developers who want to finance projects, either with debt or equity. Both options come with their own set of risks, and investors should always conduct thorough due diligence before investing in any type of real estate.

The main job of a real estate agent is to facilitate transactions between buyers and sellers. These agents are licensed professionals who are well versed in the buying and selling process and provide a valuable service to their clients. They can help buyers and sellers find the right match, while guiding them through all steps of the process from start to finish. They can work independently or with a real estate brokerage, where they follow the company’s branding and gain access to backend support and legal services. Read more

Real estate agents are required to be available for their clients at any time, including after hours and on weekends. They work hard to earn their commission, which is typically a percentage of the sales or rental price of the property. For this reason, they are often required to invest in marketing, networking and advertising to grow their client base and stay competitive. They are also expected to have a working knowledge of the local MLS database, where they can find information on properties currently listed or under contract.