Why should an appraiser state the period a statistical summary covers?
Correct Answer
C) It lets readers assess temporal relevance and limits of application
A summary describes observations from its stated period. Reporting that period lets users assess relevance to the effective date and whether changing conditions or composition limit application. A longer period is not automatically better, and a historical summary is not automatically a valid forecast. Extension beyond it needs justified analysis; there is no universal one-year minimum for every reported statistic.
Why This Is the Correct Answer
Option C is correct because stating the period lets readers assess temporal relevance to the effective date and whether changing market conditions or composition limit how the summary can be applied. Extending a summary beyond its period requires justified analysis.
Why the Other Options Are Wrong
Option A: It certifies that the summary is free of sampling error
Option A says stating the period certifies the summary is free of sampling error, but a date range says nothing about sampling error. A summary from any period can still be affected by sampling variation.
Option B: It allows the summary to be applied to any later effective date without review
Option B says the period allows the summary to be applied to any later effective date without review, but the opposite is true. Conditions can change after the period, so applying it later requires justified analysis.
Option D: USPAP prohibits summaries covering less than one year
Option D claims USPAP prohibits summaries covering less than one year, but there is no universal one-year minimum for reported statistics. The appropriate period depends on the market and the assignment.
Date the data
Every statistic has a time stamp. Without it, the reader cannot tell whether the number still fits the effective date.
How to use: Use this to remember why time frames accompany market summaries.
Exam Tip
Be wary of answer choices claiming a fixed minimum period or that a date range removes the need for analysis.
Common Mistakes to Avoid
- -Assuming a stated period eliminates sampling error
- -Applying an old summary to a later date without review
- -Believing USPAP requires at least one year of data
Concept Deep Dive
Analysis
This question tests why the time frame of a statistical summary matters. A summary describes the observations from its stated period, so readers need that period to judge how relevant it is to the effective date. The candidate should reject answers claiming the period guarantees accuracy, permits unreviewed reuse, or rests on an invented USPAP rule.
Background Knowledge
Market statistics are historical: they describe what happened during a defined window. Their usefulness for a given effective date depends on how conditions and the mix of sales changed since then. A longer period is not automatically better, and a historical summary is not automatically a forecast.
Real-World Application
An appraiser reports a neighborhood median price based on sales from the prior six months. By stating that period, she lets the lender's reviewer see that the data predate a recent rate increase and judge how much weight to give them.
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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Previous Question
Sale prices are $390,000, $400,000, $410,000, $420,000, $430,000. Find the arithmetic mean of their absolute deviations from the sample median. Report to the nearest dollar.
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Four sales have prices and consistently measured comparison areas of $250,000/1,250 sqft; $312,000/1,600 sqft; $348,000/1,740 sqft; and $410,000/2,000 sqft. Calculate the equal-observation arithmetic mean of their four individual prices per square foot.