An appraiser selects the comparables that best match the subject rather than drawing sales at random. What follows?
Correct Answer
B) Random-sampling inference requires assumptions not established by this selection alone
Selecting comparable properties by judgment can be appropriate for the assignment. It does not by itself satisfy the assumptions of simple random sampling, so a random-sampling confidence interval cannot be justified merely by counting those selected sales. Other inferential models require their own stated assumptions and validation. Neither automatic invalidity nor guaranteed market representativeness follows.
Why This Is the Correct Answer
Option B is correct because selecting comparables by judgment does not by itself satisfy the assumptions of simple random sampling. A random-sampling confidence interval therefore cannot be justified merely by counting the selected sales. Other inferential models need their own stated assumptions and validation.
Why the Other Options Are Wrong
Option A: The comparable selection must be redone by random draw
Option A, saying the selection must be redone by random draw, overstates the problem. Judgment selection of comparables can be appropriate for the assignment; it simply does not support random-sampling inference.
Option C: The selected cases represent the whole market as a random sample would
Option C, saying the selected cases represent the whole market as a random sample would, is wrong because cases chosen for similarity to the subject are not a random draw and need not represent the whole market.
Option D: The careful selection narrows the confidence interval for the market mean to a valid range
Option D, saying careful selection narrows the confidence interval to a valid range, is wrong because careful selection does not create the random-sampling conditions that a valid confidence interval relies on.
Chosen is not random
Comparables you hand-pick for similarity are chosen, not random, so random-sample math does not automatically apply.
How to use: Use this to evaluate answers that claim statistical validity from judgment-selected comparables.
Exam Tip
Eliminate extremes on both sides: the selection is not automatically invalid, and it is not automatically representative.
Common Mistakes to Avoid
- -Treating judgment-selected comparables as a random sample
- -Thinking judgment selection must be replaced by random draws
- -Believing careful selection makes a confidence interval valid
Concept Deep Dive
Analysis
This question tests the difference between judgment-based comparable selection and random sampling. Choosing the best-matching comparables can be sound appraisal practice, but it does not meet the assumptions of simple random sampling. Statistical inference that depends on random sampling cannot be claimed just from such a selection.
Background Knowledge
Classical confidence intervals assume observations are randomly drawn from the population. Sales used in appraisal and ratio studies are not randomly selected in the strict technical sense, so statistical inferences need assumptions that are stated and checked.
Real-World Application
An appraiser selects four sales most similar to a subject home and is asked by a client for a 95 percent confidence interval. The appraiser explains that hand-picked comparables do not support a random-sampling interval and instead reconciles the adjusted values with reasoned judgment.
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