An appraiser estimates a market-wide price trend using only sales data from one brokerage that specializes in luxury homes, without checking how other segments are represented. What is the principal concern?
Correct Answer
A) Selection bias from an unrepresentative sample
A luxury-focused brokerage may omit much of the wider target market, creating an unassessed coverage and selection problem. Check the target population, actual transaction mix and representation before generalizing. The same records may still be useful for the represented luxury segment. Their source alone does not prove arithmetic error or a confidentiality violation.
Why This Is the Correct Answer
A luxury-focused brokerage may omit much of the wider target market, creating an unassessed coverage and selection problem. Check the target population, actual transaction mix and representation before generalizing. The same records may still be useful for the represented luxury segment. Their source alone does not prove arithmetic error or a confidentiality violation.
More Statistics Questions
Sale prices are $270,000, $290,000, $300,000, $310,000, $330,000. Treat the listed observations as the complete population and divide by n when computing the standard deviation. Report to the nearest dollar.
A sales sampling frame systematically excludes a relevant part of the target market. What is the principal risk?
Compared with analyzing one matched sale pair for one feature, what can a suitably specified multiple regression do?
The base-period median sale price is $400,000 and the current-period median is $460,000. Compute the price relative defined as current ÷ base, as a decimal to three places.
The assessment-to-sale ratios are 0.8, 0.85, 0.9, 0.92, 0.95, 0.98, 1.02, 1.05, 1.08, 1.1, 1.15, 1.2. Calculate COD as [average absolute deviation from the median ÷ median]×100. For even n, average the two middle ratios. Report the COD as a percentage to two decimals.
Assessment-to-sale ratios are 0.94, 0.96, 0.98, 1, 1.01. Compute the arithmetic mean. Report as a decimal ratio to three places.
Market data show a first quartile sale price of $405,000 and a third quartile sale price of $495,000. What is the interquartile range, to the nearest dollar?
Assessment-to-sale ratios are 0.96, 0.98, 0.99, 1.01. Compute the arithmetic mean. Report as a decimal ratio to three places.
Given first quartile $400,000, median $440,000 and third quartile $500,000, compute the trimean (Q1+2×median+Q3)/4. Report to the nearest dollar.
The positive observations are 10, 15, 22.5. Compute their simple geometric mean (product of all observations)^(1/n). Report as a dimensionless ratio to three decimals.
People Also Study
Real Estate Market
13.6% of exam
Property Description
11.8% of exam
Land or Site Valuation
4.5% of exam
Sales Comparison Approach
16.4% of exam
Cost Approach
13.6% of exam
Previous Question
Four parcels have assessed value/sale price pairs of $120,000/$100,000, $210,000/$200,000, $255,000/$300,000 and $300,000/$400,000. Compute each assessment-to-sale ratio. Define PRD as their arithmetic mean divided by total assessed value/total sale price. Which rounded PRD and observed sample tendency follow?
Next Question
An additive sale-price model includes a linear months-before-effective-date predictor alongside relevant property controls. What is its intended analytical role?