Which consideration supports treating a sales sample as representative of a defined market population?
Correct Answer
D) Its relevant characteristics and selection reflect the defined target population
A sample should represent the relevant characteristics and selection structure of its defined target population. A fixed count, three-month window or exclusion of every adjusted sale does not establish that. A visibly similar mix can still hide selection bias. For a subject appraisal, the relevant competitive segment may differ from the entire county-wide transaction mix.
Why This Is the Correct Answer
Option D is correct because representativeness depends on whether the sample's relevant characteristics and selection structure reflect the defined target population. Representativeness improves when the sample proportionately reflects major property characteristics present in that population.
Why the Other Options Are Wrong
Option A: It contains at least 30 observations drawn from across the wider region
Option A relies on at least 30 observations drawn from across the wider region, but a fixed count does not establish representativeness, and drawing from a wider region may include markets outside the defined population.
Option B: It includes the three most recent months of sales in the county
Option B relies on the three most recent months of county sales, but a time window alone does not show that the sample reflects the population's characteristics. A recent sample can still be skewed toward certain property types.
Option C: It is limited to the sales that most closely resemble the subject property
Option C limits the sample to sales most closely resembling the subject, which may suit a comparable selection but does not make the sample representative of a broader defined market population.
Mirror the population
A representative sample is a small mirror of the target population, matching its relevant characteristics and how it was selected.
How to use: Use this to judge whether a sample truly represents the market being studied.
Exam Tip
Be skeptical of answers that rely on a fixed count or time window alone; representativeness is about matching the population.
Common Mistakes to Avoid
- -Assuming a large sample is automatically representative
- -Equating a recent time window with representativeness
- -Confusing comparable selection with population sampling
Concept Deep Dive
Analysis
This question tests what makes a sample representative. A sample is representative when its relevant characteristics and selection reflect the defined target population. Fixed counts, short time windows or picking only the closest matches do not establish that by themselves.
Background Knowledge
A representative sample mirrors the relevant features of the population it is meant to describe. Sample size affects precision but does not cure selection bias. For a subject appraisal, the relevant competitive segment may be narrower than all county sales.
Real-World Application
An appraiser studying a suburban single-family market checks that her sample includes homes of the ages, sizes and locations found in that segment, rather than simply grabbing the latest 30 county sales.
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?
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?
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.
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Three sales at $500,000, $520,000 and $510,000 receive reliability weights of 0.5, 0.3 and 0.2, respectively. What is the weighted mean price, to the nearest dollar?
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