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
Capital appreciation financial goals set by a company or an individual over an extended period of time. Long-term capital goals establish a method for achieving the capital goal outcome ...
Stairs or porch by the front door of the house. ...
A column designed to support a concentrated load. A pier column is made out of steel, steel reinforced concrete or wood. A structure extending out into the water supported by numerous ...
Violating a law, commitment, duty, or obligation through commission or omission. The responsibilities of an agreement or guarantee are not met. ...
Method of appraising real estate based on the market comparison of neighboring properties having similar characteristics. Seeks to answer the question: What would it cost to substitute a ...
Stature regulating the use of credit information. Allows consumers such as prospective homeowners access to their credit files. It requires a lender to explain how loan interest is ...
The act or process of decreasing in size. The total amount of decrease. ...
An administrator appointed by the government or the courts to administer the laws relating to a government agency or court. A commissioner is a part of a government or court commission. ...
Expected period that property will provide benefits. It is typically less than physical life of the property because the property continues to have physical life regardless of inefficiency ...
Have a question or comment?
We're here to help.