Real estate is a term that refers to a variety of properties including homes, offices, apartments, shopping centers and even factories. It can be purchased and sold by individuals and businesses to generate a profit.

How does real estate work?

Whether you’re buying a home, investing in commercial real estate or working to earn a living in the field, it’s important to understand how real estate works. From the moment you decide to buy a property until the time it’s sold, there are a number of people who help make the process go smoothly. These include mortgage lenders, property appraisers and buyer’s agents.

The first step in the real estate process is getting pre-approved for a loan. This is done through a mortgage lender and can be a great way to find out what type of housing you’re looking for and how much you can afford.

Next, you’ll need to choose an agent who specializes in your particular type of property or who has experience in the area where the property is located. You’ll want someone who understands the local market, can identify properties that fit your criteria, and can explain the process to you so you’re aware of what to expect.


In some cases, you may even opt to hire a buyer’s agent as well. A buyers’ agent can help you find a home that meets your budget and other requirements, then negotiate for you with the seller to get the best deal possible.

When you’re ready to purchase a property, you’ll need to put down an earnest money deposit and escrow the transaction with a neutral third party. This third-party will hold the deposit until the seller accepts your offer, or you’re able to secure financing on the property. More info


After the purchase is completed, you’ll need to pay your property taxes and insurance annually. In addition, you’ll need to keep up with maintenance and repairs.

You’ll also need to pay off any outstanding loans on the property, such as your mortgage. The amount that you pay in interest can make a significant difference to the total cost of owning real estate, and it’s easy for these costs to add up over time.


Your home’s value can increase as the economy improves, and if you choose to sell it, you can use your profits to pay off other debt or for other financial goals. This can be done through selling it to another owner or by refinancing your mortgage at a lower rate.

House flipping: Some investors will purchase homes for low prices, then sell them for a high price. This is a common practice in many areas, and it can be a lucrative way to make money when you know how to buy for low prices and then upgrade and sell the property for a higher price.

Rental properties: You can also buy a property and rent it out to tenants who are willing to pay a monthly rent. The monthly rent payments can cover your mortgage and other expenses, giving you a positive cash flow.