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How Does Real Estate Work?

Real estate is the term used to describe land and anything permanently attached to

it, like buildings and natural resources. For millions of people, real estate is their

single largest asset, and it’s a major source of wealth, income and equity. The value

of real estate often rises over time, allowing homeowners to build substantial equity

that can be used to further their financial goals. Moreover, real estate provides a

steady source of passive income through rental and property management.


The real estate industry includes a variety of professional occupations and

businesses that facilitate the purchase, sale or exchange of property. There are also

several types of real estate, including residential, commercial and industrial. Each

type has its own set of rules, regulations and processes that need to be followed.

Residential real estate is the most common and the type most people are familiar

with. It encompasses all properties designed for housing, such as single-family

homes, duplexes, ranches, townhouses, condos and apartment buildings.


Residential real estate also includes vacant land that can be used for a number of

purposes, such as grazing, hunting or building homes. It is typically owned by an

individual or family, or it’s owned by a landlord who rents it to others.

Commercial real estate is any property designed for business use. Office buildings,

shopping malls and strip malls are all considered commercial real estate. They are

typically purchased and owned by corporations or accredited investors who rent out

space to other businesses. Large multi-family apartment buildings are also

considered commercial property, and they are often owned by investment firms or

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Industrial real estate is any property designed for manufacturing or other industrial

use. This can include factories, mines, and land that is leased out to companies that

manufacture goods. This type of real estate is often bought and sold by investors or

businesses that need to expand their operations.

While there are many different ways to buy and sell real estate, the most common is

through a real estate broker or agent. These professionals have the knowledge and

experience to handle all aspects of a real estate transaction. They can help their

clients find the best property for their needs and assist in negotiating prices. They

can also help with the legal side of a deal by preparing documents such as a

purchase agreement, a survey and a title insurance policy.


Another important role of a real estate broker is to market the property they are

selling. They can create listings on websites such as the Multiple Listing Service

(MLS), and advertise the property through various channels, such as social media.

They can also host open houses and provide tours to potential buyers. They can also

help their clients with financing, if needed. This can be through a mortgage, or

through cash sales or “cash for keys” transactions. If a property isn’t selling, brokers

can also recommend improvements or marketing strategies to improve the sale.