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
As a suburban nation with the majority of Americans living in the suburbs, the actual classification of suburbs had long been expected. Still, recently, three academic approaches for ...
Legal action of a landlord to remove a tenant.The tenant may have violated the lease agreement such as for the tenant's failure to pay the rent. ...
Balcony or low ceiling overhang just above the main floor and between the next story. In a theater, a mezzanine is the first balcony above the stage. ...
The definition of emblements in real estate is very simple: emblements are the crops grown on a piece of property leased to a tenant. Legally, the crops are the property of the person who ...
Form used to record information about a credit applicant's ability to meet his obligations in connection with a real estate purchase. ...
The angle of a roof in relation to its horizontal axis expressed as a ratio of inches (cmm) per foot of horizontal distance. The sloping of ground, such as sloping ground away from the ...
The definition of the term “demise” covers more spectrums than just real estate related. Most commonly the term demise is used to talk about someone’s death. It is also ...
Decision rendered by a court of law. ...
A home seller and a home buyer agreed upon a fair market value and the deal is off to closing the sale. One of the next steps is running a title search. But what is a title ...
Have a question or comment?
We're here to help.