Jesse and Felicia have outgrown their current house and are definitely planning on purchasing a new home in their current town. Once they purchase their new home they will sell their current house. They have found two houses they are potentially interested in buying. The first potential house (call itHouse A) costs $150,000 more than their current home. The second potential house (call itHouse B)is about the same size, but is closer to downtown and so costs $200,000 more than their current home. The town has been recently awarded a big state-funded redevelopment grant to turn the downtown into a lively commercial district, so they feel confident that real estate in their current town is the best investment they could make.

Should Jesse and Felicia factor in the following costs when choosing which home to buy? Briefly explain why or why not.

1. The fee they will have to pay to a real estate agent to sell their current house.
2. The cost of hiring an inspector to inspect the house they are planning to purchase. (Inspectors charge by the house, not by the square foot.)
3. The return they would earn from investing $50,000 in stock market index funds, the next best use of their money.
4. The additional property taxes they would owe if they purchased House B.
5. The cost of hiring movers and the overall stress and hassle of packing and moving.
6. The additional commute time from their offices to and from House A.