What is the range of the following comparable sales: $275,000, $290,000, $285,000, $305,000, and $295,000?
Correct Answer
A) $30,000
Range is calculated by subtracting the lowest value from the highest value. $305,000 - $275,000 = $30,000.
Why This Is the Correct Answer
Option A ($30,000) is correct because range is calculated using the simple formula: highest value minus lowest value. From the given comparable sales, the highest value is $305,000 and the lowest value is $275,000. Subtracting $275,000 from $305,000 equals exactly $30,000. This calculation follows the standard statistical definition of range that appraisers must understand for analyzing comparable sales data.
Why the Other Options Are Wrong
Option B: $290,000
Option B ($290,000) represents the median value of the dataset when arranged in order, not the range. The median is the middle value in a sorted list and is a measure of central tendency, completely different from range which measures dispersion.
Option C: $20,000
Option C ($20,000) appears to be an incorrect calculation, possibly confusing the range with the difference between other values in the dataset. This might result from subtracting $275,000 from $295,000 instead of using the true highest value of $305,000.
Option D: $10,000
Option D ($10,000) is far too small and likely represents the difference between consecutive values in the sorted dataset, such as the difference between some middle values, rather than the full range from lowest to highest.
High-Low Range Rule
Remember 'HI-LO = RANGE-O' - always subtract the LOwest value from the HIghest value to get the RANGE
How to use: When you see a range question, immediately identify and circle the highest and lowest numbers, then subtract: HIGH minus LOW equals RANGE
Exam Tip
Always arrange the numbers in order first (lowest to highest) to easily identify the minimum and maximum values before calculating the range
Common Mistakes to Avoid
- -Confusing range with median or mean values
- -Subtracting in the wrong order (low minus high instead of high minus low)
- -Using middle values instead of the true highest and lowest values
Concept Deep Dive
Analysis
This question tests the fundamental statistical concept of range, which is a basic measure of data dispersion used extensively in real estate appraisal. Range represents the spread between the highest and lowest values in a dataset, providing appraisers with a quick understanding of how much variation exists among comparable sales. In appraisal practice, understanding the range of comparable sales helps determine the reliability of the data set and identifies potential outliers that may need further investigation. A narrow range suggests more consistent market conditions, while a wide range may indicate diverse property characteristics or market volatility.
Background Knowledge
Range is one of the basic measures of dispersion in statistics, calculated as the difference between the maximum and minimum values in a dataset. In real estate appraisal, statistical measures like range help appraisers analyze the reliability and consistency of comparable sales data.
Real-World Application
Appraisers use range analysis when reviewing comparable sales to determine if the spread of values is reasonable for market analysis, helping identify outliers that may need adjustment or removal from the analysis
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