The following rental rates were observed: $1,200, $1,150, $1,200, $1,300, $1,250. What is the mode?
Correct Answer
B) $1,200
Why this is correct: The mode is the value that appears most frequently in a data set. List the rental rates: $1,200, $1,150, $1,200, $1,300, $1,250. Count occurrences: $1,200 appears twice, while all others appear once. Thus, $1,200 is the mode. Why the other choices are wrong: $1,220 is the mean (average), not the mode. $150 is the range (difference between highest and lowest), not a central tendency measure. $1,250 is the median (middle value when sorted), not the mode. Exam tip: Mode = most frequent; mean = average; median = middle. Don't confuse these basic statistics.
Why This Is the Correct Answer
Option B ($1,200) is correct because it appears twice in the dataset ($1,200, $1,150, $1,200, $1,300, $1,250), making it the most frequently occurring value. By definition, the mode is the value that appears most often in a set of data. All other rental rates ($1,150, $1,300, and $1,250) appear only once each, so $1,200 is definitively the mode. This frequency analysis is straightforward: count how many times each value appears and identify the highest frequency.
Why the Other Options Are Wrong
MODE = Most Often Displayed Example
Remember MODE as 'Most Often Displayed Example' - the value that shows up the most times in your data. Think of it as the 'popular kid' in the dataset who appears at the party most frequently.
How to use: When you see a statistics question asking for the mode, immediately start counting how many times each value appears in the list, then pick the value with the highest count
Exam Tip
Always count frequencies systematically by going through the data set value by value - don't try to do it in your head as you might miss duplicates
Common Mistakes to Avoid
- -Confusing mode with mean (average)
- -Confusing mode with median (middle value)
- -Calculating the range instead of identifying frequency
Concept Deep Dive
Analysis
This question tests understanding of the mode, which is one of the three fundamental measures of central tendency used in real estate appraisal statistics. The mode represents the most frequently occurring value in a dataset and is particularly useful when analyzing rental rates, sale prices, or other market data where certain values cluster together. Unlike mean and median, the mode can be applied to both numerical and categorical data, making it valuable for identifying the most common price point or property characteristic in a market. In real estate appraisal, the mode helps appraisers understand market preferences and typical pricing patterns.
Background Knowledge
The three measures of central tendency are mean (average), median (middle value), and mode (most frequent value). In real estate appraisal, these statistics help analyze comparable sales, rental rates, and market trends to support valuation conclusions.
Real-World Application
When analyzing rental comparables for an income approach valuation, an appraiser might find that $1,200/month appears most frequently among similar units, indicating this is the most common market rent that tenants are willing to pay and landlords can achieve
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