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
The allocation method estimates the value of the property’s land by gathering information from comparable properties. The allocation method of estimating site value is ideal, however, ...
An increase in the price or market value of real estate. ...
Person or business that obtains mortgages for others by finding suitable lenders. The mortgage broker sometimes deals with collections and disbursements. Typically the mortgage broker ...
The maximum pre-approved amount that an individual or business can borrow without preparing a new credit request. It is a safety buffer in the event funds are needed for unexpected ...
Amount received when property is changed from one use to another. ...
The concept of a release can define various meanings in the financial and real estate business. Typically, it establishes a discharge or literal escape from a loan borrower's economic ...
Same as term cape cod colonial house: Early American style 1 1/2 story house with a steep gable roof covered with shingles. The bedrooms are on the first floor, but the attic is often ...
An unpreventable, overwhelming, and irresistible force. It is common to place a force majeure clause in a construction contract to indemnify a construction deadline in the event an act of ...
Place where real estate is situated. The geographic location of property affects its value. For example, real estate in a good neighborhood is worth more. ...
Have a question or comment?
We're here to help.