Typically, when people decide to buy a home, they don’t start their search with a certain-priced house in mind. They start with a list of features they want and need.

For example, buyers might decide they want 3 bedrooms, a gourmet kitchen, 2 baths, and a 2- or 3-car garage. From there, they begin to focus on the neighborhoods and prices of homes. It’s very process to buying a car. First, the buyer decides whether they want a convertible or SUV, check out the fuel economy of the various car models or what exterior color would satisfy their needs or appeal to their ego. In either case, they usually decide on the features of their perfect house or car before they consider the price of the item.

But price is really only one important consideration in the buying equation. A smart buyer will also consider the overall cost of the item. With a car, you need to consider the cost of gas, maintenance, insurance, and depreciation. If you get a great price on a three-quarter ton, four-wheel drive pickup truck that gets 8 miles per gallon but you have a 50-mile commute to work each day, the truck may not be the best deal. In this case, the overall operating cost of the vehicle will certainly have an impact on a smart buying decision.

The same is true for buying a house. While the price of a specific house may appear perfect, many other factors should also be considered before actually buying the home. Is the purchase of a 4,000-square-foot house with 5 bedrooms really a good decision if you need a 2,500-square-foot home with 3 bedrooms? Even if both homes are priced the same? How will you adjust your budget to pay for the higher cost of heating and cooling the larger house?

A larger house usually requires more maintenance. Is that in the budget? Two air-conditioning systems means two systems to break and two service calls to pay when repairs are needed. Is that in the budget? A larger house will have more rooms to paint, more windows to repair, and more light bulbs to replace. Just like buying the wrong car, the operating costs can impact your budget.

Another important factor to consider when buying a house is the cost of the mortgage. Again, just like the initial cost of a car or truck, the initial amount of the mortgage is important but may not be the critical factor. The “operating” cost of the mortgage is usually much more important. The mortgage interest rate dictates the operating cost of a loan. A small change in the interest rate will have a huge effect on the total cost of the home. For example:

In this example, a one percent change in the mortgage interest rate increases the monthly payment by $120. If you stay in the home and pay off the mortgage on time, your new home will cost $44,000 more. If everything else stays the same in the house, you will still pay an additional $44,000 to live at that address.

Oftentimes, homebuyers will walk away from a purchase simply because the seller refuses to negotiate a lower price of one or two thousand dollars. If a buyer finds their perfect home but fails to reach agreement on the price, they risk spending thousands of dollars extra in operating costs. If the buyer takes an extra month to locate another “perfect” home and the interest rate rises, the monthly payment will rise and their total costs of the home will rise dramatically. Sometimes, it is wiser to reach agreement with a seller and pay a little more for a house today. Over the life of the home loan, a buyer could spend many more dollars on the loan’s operating costs if the buyer delays and, meanwhile, interest rates rise.

So, what is the biggest homeowner expense? In my opinion, the biggest homeowner expense is failing to consider the total operating costs when purchasing a home. Buyers who buy more house than they really want because they are getting a “steal” … buyers who don’t consider the cost of commuting to work or the cost of maintaining the home they purchase … and buyers who delay purchases because they refuse to negotiate a fair price with sellers. These buyers make the most expensive mistakes.

As my dad used to say, “It’s not the price of the horse that’s expensive – it’s the operating cost!”

If you’re selling your house, why would you tell potential buyers about the stuff that’s wrong with it? Caveat emptor, right? Not so fast.

Letting the buyer fend for himself may work fine when selling your eight-track player on Craigslist, but it’s a terrible idea for a homeseller.

For starters, it’s against the law. In Texas, as in many other states, you have an obligation to disclose known problems to potential buyers. There’s even a form you must fill out.

Occasionally, though, a seller decides not to tell what he knows about the property’s shortcomings. I know this happens because I’ve read summaries of the court cases. See … while a person may not care enough to sue if he buys a used stationary bike with undisclosed flaws, things can quickly escalate to a lawsuit when a purchase in the six-figure range is based on misinformation (or missing information).

Your Texas REALTOR® can advise you how to fill out a seller’s disclosure form, who is exempt from doing so, what types of disclosures are not required, and when it’s a good idea to disclose those items anyway.