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
Unsecured long-term debt. There is no collateral or lien on the property. A debenture can only be issued by a financially sound borrower with an excellent credit rating because no ...
Claude in a contract, title, or mortgage that is subject to being annulled, repealed, or revoked upon the satisfaction of a claim or completion of a future event. ...
Changing property ownership. An example is the sale of a home to another. ...
(1) Paved roadway constructed above lowlands such as a swamp. (2) Roadway in ancient Egypt connecting the valley temple with a pyramid. ...
Something that is inferred, but not explicitly stated. The inference may be deducted from the relevant information. ...
Buyer who is acting in good faith, is not aware of any outstanding claims or rights of others to the property, and has given valuable consideration as part of the business transaction. ...
Intentionally misstated or undisclosed facts, statements or representations. Misrepresentation is a form of fraud which could lead to cancellation of a contract or other liability. For ...
Legal status conferred by certain states on a homeowner's principal residence. In certain states, homestead status may provide protection against creditor claims or forced land sales ...
Thinking about selling your own home without an agent? You can. For Sale By Owner or FSBO is how it’s called in the real estate world. It's when a homeowner decides to sell his/her ...
Have a question or comment?
We're here to help.