Did you know real estate agents make an average of $42,183? If you want to know the answer to “how does real estate work,” we can help.

In this guide, we’ll cover a basic breakdown of real estate. You will understand what real estate agents do and what they can sell.

Want to learn more? Keep reading.

What Is Real Estate?

Real estate refers to a plot of land, a high rise office, or a suburban home. The term applies to the property and the attachments.

Real estate agents tend to specialize in one area of real estate. Others will sell commercial and residential properties.

Residential Real Estate

Residential real estate refers to properties that get used for a personal purpose. Residential properties will get sold to families and individuals. The buyer won’t use the space for business purposes or to make a profit.

Agents tend to begin their careers in this area of real estate.

Commercial Real Estate

Commercial real estate includes non-residential properties that can generate an income. Examples include hotels, shopping malls, and office spaces.

Manufacturing facilities and processing plants also are part of this category.

Real estate agents specializing in the commercial sector will sell to investors. They will also sell to businesses looking for rental spaces.

What Education Do You Need?

You don’t have to get a college or a university degree to become a licensed real estate agent.

Every state has different rules before an agent can represent buyers or sellers. Start your career after a state licensing exam and specific educational credits.

Where Do You Work?

An agent can work under a brokerage firm or broker but not alone. If you want to work alone, you can become a real estate broker.

A broker has to take further education to get their broker’s license. Every state will have its broker education and exam regulations. The coursework will cover topics like insurance, taxes, contracts, and ethics.

A broker will learn at a more in-depth level compared to a real estate agent pre-licensing course.

A broker will learn how the law applies to real estate investments and operating a brokerage.

A broker can work on their own and manage agents under their firm. Brokers often use tools like multiple listing services.


Real estate agents have to juggle many different tasks throughout the day. An agent will manage listings and complete admin tasks like paperwork.

Realtors also study and stay updated on industry and market trends. As a realtor, you will maintain and build new client relationships. You’ll create your brand and marketing plan.

A realtor must be available to chat with their clients at any time. Realtors might get a call at 11 at night. The industry is so fast-paced that they must be ready to answer or make a call.

Pay structures vary depending on if the agent works on their own or beneath a brokerage firm. Most agents will get their earnings from the commission.

Realtors must go the extra mile to meet the demands of their clients and get their paycheck.

Finding a House

A real estate agent will meet with their client to figure out their criteria and must-haves for a home. The agent searches the market listings to find homes that match the buyer’s needs and wants.

A buyer will visit a few properties until they find one that matches their budget and needs.

Offer on the House

After the buyer finds a home they love, they will need to make a formal offer. The formal offer is an offer letter and is a binding legal document. It’s also called a purchase agreement.

The report needs careful revision before the agent submits it to the seller. The agent will start with a price offer. There might be contingencies that could end or change the deal.

An agent will play an essential role in helping the buyer make a competitive and fair offer.

The real estate agent understands the legality of the letter and submits it in the right manner.


After a seller accepts the buyer’s offer, the deal goes into escrow. A third-party provider holds the money until the deal gets finalized.

During this time, a buyer hands over their money deposit to show they are serious. The money gets held in a third-party escrow account until the financing gets secured for the home.

Approval of the Loan

For the deal to move forward, the buyer needs to get a loan to pay for their home.

Some people have the finances available to pay for their home in cash and skip this step. Most people need to get a loan to pay for residential property.

A lender, like a bank, will need to see a home appraisal. The document reveals the value of the house matches the requested mortgage balance.

If the home matches the amount, the buyer gets closer to completing the deal. Yet, if the home’s valued at less, the deal will get stalled.

Closing on the Deal

Once the buyer gets the approval, they can walk through the home to ensure everything is in order.

A real estate agent will remain with their client to finish the details. After, they might take a picture of the successful sale and post on their social media account.

Now You Know the Answer to “How Does Real Estate Work?”

We hope this basic breakdown of real estate was helpful. You have the answer to “how does real estate work,” but you can keep learning.

If you’re interested in becoming an agent, start connecting with local brokers. Take the licensing exam and build your network.

Don’t forget to keep browsing our other helpful resources on real estate and home.

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