It's certainly not the only factor is cost increase, but that cost will almost certainly be passed onto the buyer if the market will bare it.

You're missing the point. Sellers will charge as much as the market will bear even if they got the property for free and have zero selling costs.

I don't believe I'm missing the point you're trying to make; on the contrary, you're missing mine. Selling costs create and artificial floor. It's a pretty simple point that is in no way mutually exclusive to yours.

Not entirely. The seller is still going to factor in their costs when deciding what to sell something for.

Sellers do all sorts of irrational things when setting asking prices which have no impact on actual selling prices.

I can't agree with saying that trying to sell something for more than it cost you is "irrational"