Gross Sales Price
Definition of "Gross Sales Price"
The definition of gross sales price in real estate refers to the combined cost of a property or listing before subtracting the real estate agent’s commission, sales tax and other auxiliary fees. In short, it is the price, in its entirety, that the buyer must pay in order to purchase the property. This differs from net sales price, the amount that the seller takes away from the transaction.
In the following section, we will provide an example of the use of gross sales price as opposed to net sales price.
Example of gross sales price
Steve is an ambitious real estate investor who makes his living flipping homes on the housing market of several cities around the country. With nearly a decade of experience, Steve has little difficulty making a tidy profit off of each home he invests in. Upon finding a run down but structurally sound two story home for sale in a rapidly growing neighborhood, Steve doesn’t hesitate to quickly snatch it up.
However, bad fortune awaits Steve in his home flipping enterprises. With a severe market downturn occurring almost overnight in the area the home is located in, the value of the home plummets before it is fully renovated and prepared for sale. Desperately trying to break even, Steve does everything possible to expedite the renovation process and posts it for sale as soon as it is complete.
Market downturn notwithstanding, Steve is able to find a buyer willing to pay an amount that would seemingly allow Steve to break even. However, being an experienced real estate investor, Steve is painfully aware of the difference between net sales price and gross sales price.
With the housing market in a slump, Steve is forced to sustain a net loss on his investment, after all the auxiliary costs contributing to the gross sales price are subtracted from the amount paid by the buyer. This is an example of gross sales price in real estate.
Popular Real Estate Terms
In real estate and across the nation, you will see different types of house structures, frames, and aspects. One of those is the A-frame type. This is an architectural style that leans ...
If you have ever participated in a tricky real estate transaction, you might have encountered the relatively unknown term "deed of confirmation" or "confirmation deed." Read this ...
(1) Short-term loan that is made in anticipation of permanent longer term loans. The interest rate on such a loan is usually higher than on longer term loans. (2) A business loan in which ...
You open your mortgage documents and you see this big amount of money owed under “PITI”. But you have no clue as to what is the right PITI definition. Don’t worry; we got ...
An investigation to ascertain who legally has the title to property. For example, when a house is sold, the attorney for the purchase will do a title search to guarantee that the seller ...
Commercial building having several different uses blending together. For example, retail shops are on the first floor, professional offices are on floors two through ten, and a restaurant ...
Layer of material put on the outside wall or foundation to prevent the intrusion of water or humidity into the structure. A moisture barrier is constructed out of plastic, aluminum foil, or ...
Commitment by a lender to a borrower for a given amount of money at specified terms for the financing of a project. The borrower pays a fee for the privilege of either executing the loan or ...
Aluminum or metal treated barrier that is placed between the concrete and wood of the foundation of a newly constructed building to prevent termites from infesting the wood. Many experts ...
Have a question or comment?
We're here to help.