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
Something that cannot be taken, returned, or revoked. An example is an irrevocable trust formed by a person giving her real estate to a trust administrator. ...
See common law. ...
Generation X, also known as Gen X , is the generational extract of Americans that are sandwiched between the Baby Boomer Generation and the Millennial generation (also called ...
Upon satisfaction of a mortgage or other debt payments, the deed releases property, or a portion of it, form the incumbrance. Often it is used in circumstances where a deed of trust is ...
Judicial finding that the debtor owes an amount exceeding the value of the collateral put up for the defaulted loan. ...
Matters that need to be rectified in a home or building prior to its sale or acceptance by a new owner. For example, a leaking water pipe should be repaired prior to showing the property to ...
Lender who possesses the collateral of the borrower if the loan is defaulted upon. ...
A major factor in depreciation resulting from wear and tear from use and natural deterioration through interaction of weather elements may cause depreciation to a structure. ...
Way to obtain a faster decision in a legal case than going to a trial. Procedural rules are followed so there is less time involved in gathering the effects of the dispute and in ...
Have a question or comment?
We're here to help.